It’s no secret that in many major cities in Canada, you’re better off renting than owning because of the steep prices of properties for sale. Even in expensive cities like Vancouver and Toronto, many experts recommend renting than owning a property. Owning may seem like a sound decision, but the costs that come with homeownership will easily blow up your finances.
Renting, however, in these big cities isn’t always the most straightforward answer, either. Many rental real estate markets in 2018 and preceding years have taken a downturn. It’s so bad that some experts already see it as a potential crisis.
Take Toronto, for example, as the city has a vacancy rate of 1% in October 2017. It’s even worse in Vancouver as their rates are lower than 1%. And despite building new properties, things aren’t really looking up.
The housing shortage will most likely last a while, especially with the changes that the cities are experiencing. Here are a few reasons that attribute to the rental crisis in most big Canadian cities according to experts.
Online Hospitality Services are Turning Long-Term Rentals into Short-Term Ones
While many online hospitality services started out as peer-to-peer hosting, it has evolved as short-term rental empires in many parts of Canada. While it’s an attractive business format for many property owners, it made a huge dent in the rental market.
It might not sound like much, but with the housing shortage in major cities already in place, the transformation of long-term rentals to short-term ones is seriously damaging. A study has also determined that about 14,000 properties have become “de-facto hotels” for various hospitality apps and websites. So instead of easing the withering rental housing market, these services made things more difficult for the locals.
Steps to correct the imbalance are being taken. Vancouver made a move to restrict homeowners from renting out properties to such services. Websites like AirBnb is also said to have taken measures to deal with the concerns.
Another reason why many rental real estate markets are shrinking is the influx of international migration. More and more people are moving to major Canadian cities which puts more pressure on the weakened industry.
Stronger Job Growth
The crisis in the rental market is also attributed by experts to the strengthening job growth in major cities. More opportunities are opening to the younger population, driving them to live where these jobs are. Being a good sign of economic growth as well, this is a good thing that has surprisingly resulted in a real estate crisis.
Should You Take Advantage of the Rental Housing Shortage?
If you’re looking for a good investment and you think a rental property is a good option for you, there’s a good chance that you’ll get lucky. Taking advantage of the shortage of rental properties can give you a good chance to make money. But you need to be very wise about it.
Experts are actually divided when it comes to buying a rental property right now, especially in hot markets. The real estate prices are seriously high so those who wish to invest will have to spend a serious amount of money. There are also certain regulations in becoming a landlord, so you should look into that as well.
What some experts recommend is to rent in the city but become a homeowner/landlord in a nearby small town. This tends to make financial sense as the rental property will be technically paid off by tenants.
If you want to rent out a property in a major city, make sure to crunch the numbers first. Even if you have the money to spend on a good condo, the rent income might not be sufficient to pay for the property. Do the math first and shop around so you can find a great property to invest in.