Toronto Income Property Newsletter: January 2011

Happy New Year! I’d like to wish everyone a very safe and prosperous 2011. May you realize all your goals and dreams in this year ahead. I’d also like to thank my existing buyer clients for their patience over the past few months. Many of you suffered through a pretty dry spate of inventory last fall. Let’s hope with the turning of the calendar, more quality income properties hit the market and we get you all sorted out soon. Lastly, I’d like to remind all of you that I am available 24/7 to help you or any of your associates with any of your real estate needs. Please feel free to call or e-mail me anytime.

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It has never been a better time to be a landlord in Toronto.

A recent report released by CMHC reports that the vacancy rate in Toronto has dropped to 2.1%, almost a full point down from the previous year. Some believe that in the downtown core the vacancy rate is in fact even lower. This means that almost 98% of the available apartments are rented. When the housing market starts to slow a little, potential purchasers often turn into renters.

This statistic covers the entire GTA and primarily focuses on rental apartment buildings. If you consider how many rental apartment buildings there are in the suburbs, one would expect that there are even fewer available suites in higher-end downtown multiplexes.

We are in the business of renting out apartments in duplexes, triplexes, multiplexes as well as

detached/semis with accessory apartments. This segment of the market is lumped in with everything else so it is impossible to know how this compares to traditional apartment buildings. It is estimated that this segment may represent up to 25% of the total rental stock out there. Since many of these rentals are houses with basement apartments, we can’t really be sure how many suites are really out there. They do separate condominium rentals and this vacancy rate is around 1.5%, so clearly nicer quality rental suites are in even higher demand.

“Secondary suites offer a valuable opportunity to create a new supply of affordable housing in both new and existing communities for seniors, students and families” states OHBA president Bob Finnegan. He also acknowledges that these secondary suites provide an important source of income for younger families and first time home buyers struggling to make mortgage payments. This is something I have been talking about for many years. If we didn’t have these available suites in duplexes and triplexes, then in fact with less stock, the vacancy rate would be even lower.

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Sales last year were much more robust in the first six months of the year. After the summer break the number of quality income properties that hit the market declined. As you can see it has become very difficult to purchase under $500K. Granted the return on lower priced properties tends to be higher, but they are just getting harder and harder to find.

Here are the statistics for income property (houses w 3 or more kitchens) sales as posted on TREB MLS:

C01 – Downtown west of Yonge to Dufferin

# of Sales: 97 Avg Price: $685000 Days on Market: 16

C02 – Annex, Hillcrest, Yorkville (north of Bloor)

# of Sales: 46 Avg Price: $694000 Days on Market: 12

C03,C04 – Chaplin Estates, Midtown (west of Yonge)

# of Sales: 42 Avg Price: $675000 Days on Market: 19½

C09,C10,C10 – Rosedale, Midtown (east of Yonge)

# of Sales: 66 Avg Price: $877900 Days on Market: 13½

W01 – Roncesvalles, High Park, Junction

# of Sales: 52 Avg Price: $620000 Days on Market: 13

E01,E02,E03 – Riverdale, Leslieville, The Beach

# of Sales: 70 Avg Price: $558200 Days on Market: 16

NOTE: I don’t count sales with only two kitchens since it is not possible to verify if the sale was a proper duplex or simply a house with a basement apartment.

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