Exceptional job growth in the Greater Toronto Area, along with consistently high immigration, has spurred strong rental demand through the first half of 2019.
According to a report from Marcus & Millichap, the region is brimming with tech sector talent and it played a crucial role in the 81,600 jobs created in the GTA through the first two quarters of the year.
“Employment grew at a rate of 3.4% year-over-year in June, a substantial rise from the 2.9% pace posted one year earlier,” read the Marcus & Millichap Multifamily Market Report. “A less restrictive immigration policy in contrast to the U.S., coupled with a mature tech ecosystem backed by government incentives and world-class universities, has Microsoft, Amazon, Pinterest, and many other global firms searching for talent in the metro. A healthy economy and labour market have been a boon for household formation, a key driver of apartment demand, contributing to a strong rental market over the last few years.”
The ripple effects of B-20 continue being felt in the GTA, where the benchmark price of a single-family home in June was more than $875,000, serving as another major driver of rental demand. The report makes note of the fact that, at the end of 2018, the average rental unit in Metro Toronto was $1,370, a 4.7% rise over the previous year.
However, that was still around $2,000 less in monthly payments than the single-family benchmark price—a fact most salient for first-time homebuyers—which has come with its own set of problems.
“A challenging housing market, particularly for first-time buyers, has led to rental demand far exceeding supply growth, holding the vacancy rate at a tight 1.1% last year,” said the report.
The report also cites investor interest in the GTA market, resulting in a 9% increase to the average purchase price as it surpassed $277,000 per unit.
“Assets in the heart of Toronto changed hands at an average price just below $300,000 per unit. Greater affordability was found in Brampton, Scarborough and Oakville, with properties trading on a per unit basis in the low-$200,000 band.”
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