Toronto Income Property Newsletter: Spring 2024

The City of Toronto had one last blast of winter this weekend as the spring season formally began. Many felt that we were short-changed on winter this year as we really didn’t have a lot of snow or bad weather over these past few months. Some went so far to say that the unseasonably warmer weather had a helping hand in bringing more buyers into the market, putting an end to the recent slower sales and lower prices. 

The Toronto real estate market remains difficult to predict as we come out of the March Spring break. The quietness of December and January has certainly passed as many buyers are getting back into multiple offers and some agents are again listing their properties lower, with designs on obtaining a final sale price well above the asking. Interest rates are also still holding firm. Some expect the market to be better for buyers when rates start to drop again. I do not think we will see a big drop in the borrowing rate in the short term. So long as inflation remains an issue, I believe that the Bank of Canada will hold its position. 

On the income property side, our one issue is still lack of inventory. There are simply not enough quality duplexes, triplexes, and multiplexes available for sale at the moment. The good ones that do hit the market and are priced accurately tend to still sell quite fast. It seems like decent quality properties in top tier one neighbourhoods are still in high demand. While cap rates are higher than they have traditionally been, the monthly affordability is harder due to higher interest rates. Many borrowers that have had to re-up their mortgages in the past year have seen a steep increase in their monthly cost. The amount of deposit required to achieve break-even each month is also much higher now as well. Imagine having to put down upwards of 50% of the purchase price just to not have to not go in your pocket to stay afloat each month. 

There are currently no properties for sale in downtown Toronto (C01, C02) that are under a million dollars. From an investment standpoint, some investors are moving away from the central core to find lower priced properties in the outlying areas. It always makes fiscal sense to buy a property with offsetting income. Whether you require the rental income or not, at least you have the option if finances start to tighten up. 

If you or someone you know is considering a residential investment property in Toronto, please reach out to me. I have over 20 years of experience selling these kinds of properties so I am sure I can keep you on track. I would also like to wish a Happy Easter to everyone and their families. 

– P.A.

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