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Real Estate Predictions

Rents never go down? They are down 10-30% in London in the last six months:

http://www.smh.com.au/world/rentals-fall-in-a-swamped-london-20090320-94f2.html

Since rents are based on the actual cashflow that tenants can afford, they can't be manipulated through interest rate changes like mortgage rates can be. If unemployment goes up and incomes go down, rents will follow. We've also had a huge increase in the supply of rental condos in the last few years, and a shrinking pool of renters thanks to the recent construction boom.

As anecdotal evidence, I am moving but was offered a 10% discount on my rent from the current landlord to stay in my current apartment.
 
Ron said:
One thing to consider is rents. Rents always go up, not down. Especially as we are in for major inflation. Properties mainly condos below 300,000 cannot drop much more in price. I don't think a situation will arise where you could carry a 2 bedroom condo for 1000 where the present rent is 1800. There is upward pressure to keep condo carrying cost close to rental prices. It would be interesting to verify historical rental rates especially during the last housing crash in canada and see if rents crashed as well?
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it's counter-intuitive, while re values have increased in t.o. rents have not. rents have pretty much been stagnant since 01 (for me). this creates a problem in that the asset rises in value but the income stays the same. in effect this really kills the rental business as the caps were so low for a while it wasn't worth buying stuff to rent out or to develop rental properties.

in the short term i expect the res rents to stay flat or decrease as more condos come online. my margins are pretty thin so i would think condo landlords are probably having a much tougher go at it. commercial will get hammered as the economy continues to slide. the best re class for the next couple of years will be multi-unit res. with commercial it's flight to quality.

i've found rents to move inversely with vacancies, i remember in early 00 and 01, the vacancies were so low, i had people begging for places. times have definitely changed.
 
I remember how bad it was back then, it was brutal to be a renter. Now landlords are tripping over themselves for good tenants...
 
Rental vacancies and rates

from the trenches:

1 - Rentals are still in very high demand - at least in the downtown core at the newer buildings.

2 - 1 / 1+den leases quickly (days) and 2-beds lease within a week or two.

3 - Most leases I work on show rents more or less the same as they were.

4 - There are many qualified tenants around, employed and take care of the properties they lease.

5 - There may be an increased demand for rents now that less are buying.
 
rental rates

Yossi Kaplan said:
from the trenches:

1 - Rentals are still in very high demand - at least in the downtown core at the newer buildings.

2 - 1 / 1+den leases quickly (days) and 2-beds lease within a week or two.

3 - Most leases I work on show rents more or less the same as they were.

4 - There are many qualified tenants around, employed and take care of the properties they lease.

5 - There may be an increased demand for rents now that less are buying.
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Yossi, from your front-line experience as a realtor, how much do rentals fetch?

From what I've seen, the newer condo stock in dt TO typically goes from $2.25-2.50 PSF/m, not including parking or utilities. That rate seems to have been fairly constant over the past 10 years.

If there is an increased demand for rentals, do you think the rates will go up and by how much?
 
We need to make a distinction between the technical recession and housing prices. The technical recession will be ancient history before property prices start inflating.

We may see a dead cat bounce in real estate activity this spring but make no mistake, it is not the beginning of a new surge.

Downtown agents keep reporting that the downtown condo rental market remains strong so I accept this as fact. The general residental rental market however has seen market rents stagnant or actually in decline in inflation adjusted values during the last boom. Make no mistake however, signs point to real trouble in the condo rental market in the future. I suspect at some point to see a flip where current resilience in this sector relative to the general market will turn to it being one of the worst performers.
 
TrickyRicky said:
We need to make a distinction between the technical recession and housing prices. The technical recession will be ancient history before property prices start inflating.

We may see a dead cat bounce in real estate activity this spring but make no mistake, it is not the beginning of a new surge.

Downtown agents keep reporting that the downtown condo rental market remains strong so I accept this as fact. The general residental rental market however has seen market rents stagnant or actually in decline in inflation adjusted values during the last boom. Make no mistake however, signs point to real trouble in the condo rental market in the future. I suspect at some point to see a flip where current resilience in this sector relative to the general market will turn to it being one of the worst performers.
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seconded. with the exception of accepting what agents report as fact. pumping condos for income properties at this time may be disasterous for many people's financial future. very irresponsible, hopefully people will educate themselves.
 
Real Rental Rates

cdr108 said:
Yossi, from your front-line experience as a realtor, how much do rentals fetch?

From what I've seen, the newer condo stock in dt TO typically goes from $2.25-2.50 PSF/m, not including parking or utilities. That rate seems to have been fairly constant over the past 10 years.

If there is an increased demand for rentals, do you think the rates will go up and by how much?
Click to expand...


*Note that rents are more a function of # of bedrooms/# of possible ppl living in the place rather then size, that is mainly b/c there are so many terrible layout designs out there (someone should force the architects to live in a bach or 1-bed for a whole year in the buildings they design).

Also, b/c rents are flexible there is no hard and fast rule but a supply and demand. For example, I'd be willing to give someone better rents if they seem to be good tenants: pay on time and keep the property in reasonable condition.

Bach and small 1-beds 1000 - 1200

1-beds 1200-1400

1+den (over 600 sq ft) 1250-1450

larger 1+den 1500-1800

2-beds 1800 (no parking) to 2300 (parking, locker, upgrades, view)


Most leases + hydro + insurance, some can be inclusive of hydro. Again, no hard and fast rules, rents change constantly but always within range.

Hope that helps.
 
Chromeboy007 said:
These numbers are just a little lower than mortgage + utilities payments for owners of the same units aren't they?
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It's cheaper to rent currently with the price RE, even with the low interest rates, when you take into consideration property taxes, maintenance fees and higher monthly payments for operating costs and mortgages when rates go up because of high inflation from excess capital from central banks flooding the system in hopes of keeping the bubbles alive,


Roy G Biv said:
In some cases, definitely. I'm renting out a 2 bedroom for 3150/month, and am barely pulling out any profit.
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How big is the unit such that you're getting $3150/m ... 1400 SF?
 
cdr108 said:
when rates go up because of high inflation from excess capital from central banks flooding the system in hopes of keeping the bubbles alive,
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I'll be cautiously relieved when that happens. So far we have heard about the TARPS, low central bank interest rates and stimulus plans, but we have yet seen any indication of inflation here or in the US.
 
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smokeonthewater said:
Look ahead friend. The logical consequence of a tsunami of stimulus is a catastrophic devaluation of currency and hyperinflation. Even if we in Canuckada are less fiscally irresponsible we are still tied to the US wagon. So their inflation rate is 20% and ours is 15%. You still aren't going to be getting a mortgage for 4% anymore. Maybe not in 2010, but there's no way to avoid it from eventually occurring.
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when you're holding debt, deflation is the killer not inflation. but ya gotta lock in!
 
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