Vacancy rate doubles as interest rates remain low

'Why would someone rent,' one realtor asks

National Post - June 13, 2002
by Lauren Mechling

Toronto's notoriously tight rental market may offer some relief to apartment hunters. Vacancy rates have doubled in the past six months.

With rental vacancies double what they were six months ago, Toronto residents are no longer scrambling to find apartments.

The city's vacancy rate has surged to 2.0% in May from 0.9% last October, according to the Fair Rental Policy Organization, which represents landlords and developers.

Industry insiders attribute the increase of rental properties to mortgage rates that at 4% to 6%, are lower than they have been since 1960. The low rates have inspired a number of Torontonians to abandon their rental units and buy homes or condominiums as rental investments.

Available apartments are cropping up at a feverish pace, especially in areas such as Yonge Street and Eglinton Avenue, Bathurst Street and Eglinton Avenue, the West End, Harbourfront, Cabbagetown, the Beaches, the Annex and City Place.

Susan Luxton, who has been renting the basement flat of her High Park house for the past 15 months, just put the apartment back on the market.

"Fifteen months ago we had lots of people looking," she said. "This time around we've only had three calls." Ms. Luxton isn't sure whether she will find a tenant by July 1, as she had hoped.

Still, apartment-seekers should be dissuaded from falling into fits of glee. While finding a place has become easier, many financial experts now consider renting an unwise financial decision.

Real estate agents like to point out that buying makes more sense than renting now: the going rate for a first-time buyer's mortgage is 5%, first-time buyers are exempt from land-transfer tax and for those who can't come up with the 5% down payment, many sellers are willing to apply a year's worth of rent to a down payment.

"Why would someone rent when they can move from a rental property for pretty much the same carrying costs into a home?" asked Woodbridge Re/Max agent Lindsay Marj.

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