Toronto Bidding Wars Moving from Houses to Two-Bedroom Apartments
As the Bank of Canada continues to raise interest rates with the improving economy, more homeowners
are selling their properties, but instead of buying a new home they are renting, driving up the cost of
renting in major cities. With the real estate market cooling and the cost of mortgages expected to climb
as interest rates go up these owners are sitting on their cash and hoping housing prices will cool down
enough for them to buy a house at a discounted rate.
Susan Isenstein and husband Norman sold their Toronto home 24 hours after it was put on the market
last month. They were looking for a home with fewer stairs, but have been having difficulty finding
something in their price range. “So you can’t find what you like, and then there’s the concern about
whether or not prices are going to go down,” says Susan.
Such homeowners who cashed out at the peak of the real estate market are aiming to put their money in
the bank rather than investing in a house. As a result there are a whole slew of new renters looking for a
good place to rent and they are engaging in bidding wars to snap up rentals that are comparable to the
properties they just sold. This is putting pressure on the supply of houses for rent in major cities.
The vacancy rate in Toronto is 2.2%, 2.7% in Vancouver, two of the lowest in Canada.
If house prices fall 10% in the next year, a possibility cited by both TD Bank and CIBC World Market
economists, a $700,000 house in Davisville Village or Leaside could be worth a mere $630,000 a year or
two from now (Find out how much your Toronto home is worth). Some homeowners apparently
think that is worth the gamble of selling their current home, renting in the meantime and then trying
to buy a comparable property in the same neighbourhood two years from now when the market has
cooled down.
But it’s a gamble. The high demand in the Toronto real estate market could just as easily drive housing
prices up instead of down. In such a big city there are so many ways to find a new home… word-of-mouth, craigslist,
search listings, you can get home listings sent to you by email, real estate agents, or just driving
around in neighbourhoods that you like and looking for “for sale” signs. So what can we make of all these changes? As someone so wisely said, “the only constant is change”.
See Also:
Are Toronto Housing Prices Up or Down?
Have You Had Enough Fear-Mongering?
Why Retiring Baby Boomers Hold The Key to The Future of Housing
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