For many years, living in Downtown Toronto has been in high demand and finding a condo to buy or rent has been a challenge. The price of condos for sale in downtown Toronto have been on a steady rise and condos for rent have also seen increasing rental rates.
As an active downtown Toronto real estate agent, I have seen first hand that the stress on rental rates have started to ease and this is a direct result of the coronavirus.
The popularity and demand of Airbnb has changed short term rentals in Toronto and across the world. Homeowners have seen large profit margins when using their properties for short term rentals opposed to long term rentals. This has put a lot a stress on the rental market as many condos were set up on Airbnb. Management of many downtown Toronto Condo buildings have battled to eliminate Airbnb by setting minimum lease periods to 3-6 months however the problem was difficult to battle as landlords often did not comply and still offered their units for nightly leases. Now in the pandemic days of coronavirus, we have seen travel literally come to a halt and the use of Airbnbs as non existent. These landlords have had to make adjustments by either putting their condos up for sale or offering the condo for long term leases of a year or more.
The increase of available rental units have eased rental rates and tenants now looking for condo units in downtown Toronto have more options to consider for less money. One of the fundamental rules of economics is that if there is more supply than demand, prices will decrease. Just taking an example of a 2 building development known for short term rentals such Airbnb are the ICE Towers which is located within steps of the Scotiabank Arena at 12 and 14 York Street. Available long term rental units soared from 44 units in February to 146 at the end of May, all now looking for long term leases.
In terms of Toronto Condo sales, First time buyers have found it difficult to enter the real estate market. Luckily some of these Airbnb landlords have now decided to sell their condo units instead of leasing long term. Some real estate investors have also decided to take profits on some of the gains they have seen in their real estate portfolio. This has also given opportunity for many first time Toronto condo buyers who have been sitting on the sidelines, waiting for an opportunity to get in. As increased supply hasn’t affected the sale price as much as rental prices because first time buyers are now actively condo shopping again. The coronavirus lockdown did slow real estate market, in March and April, but sales has started to pick up once again.
I continue to monitor the downtown condo market activity closely to see where prices are headed. There is no doubt that we have experienced a small correction in prices but whether prices will go up or down from here is yet to be determined. The state of Canada’s economy and the strength of employment will ultimately determine how many buyers step off the sidelines and enter the real estate market.
For a full market report or a free evaluation of your downtown Toronto Condo, Contact Reza!