Lately it can seem like the big cities around the world are competing over who can charge the most over the smallest amount of living space. In Canada, Vancouver has Toronto beat as the most expensive city to rent in but not by much. Compare the rental prices in the core of Canada’s three biggest cities, a one bedroom in Vancouver will run you about 1,870 dollars per month, in Toronto that would be around 1,550 a month, and finally in Montreal the most reasonable of the three would cost you around 1,300 dollars per month.
This is for apartments too, not condo’s. If you want to rent a condo in the core of downtown just apply those prices to a bachelor. There are a lot of reasons that rent in Toronto is getting more expensive, and the most obvious reason is simple supply and demand. A lot of people want to live in the city, and landlords know they have a high demand and that they can get away with charging crazy prices. There are a lot more reasons than just supply / demand making rent prices sky rocket in Toronto which is on the fast track to beat Vancouver as Canada’s most expensive to live and rent in 2018.
Why is Toronto rent is so expensive?
Foreign Investments – Foreign investors tend to focus on the high-end real estate market. They can afford to pay big money and this in turn drives up housing costs all across the city. But they have also been labelled ‘property scalpers’ buying up properties and then flipping them. Instead of local costs reflecting local salaries, locals are left to compete with massive wealth from outside of their country. Vancouver has proposed a specific tax for foreign real estate buyers, which seems like a good route for Toronto to take as well and the Liberal government in Ontario is planning to implement it. It’s a way to protect it’s own citizens and making they are able to afford to live in their cities.
Access to goods and services – The bigger the city, the more stuff it has to offer. Neighbourhoods in Toronto are not all created equal. The closer to downtown you are the closer you are to restaurants, entertainment, and different services such as schools, medical office buildings, and shopping. All of this drives up the rental price because there is a high demand to be close to these amenities. That’s not to say there are no goods and services outside of the downtown core, just that they are more spread out and not as easy to get too.
Public Transportation – There is a high demand to live close to a subway station, especially on the main line. It makes getting around easier and reduces the need for car. So it’s actually sort of a trade off, you can spend money on a car if you don’t live near public transit or more money on rent and have public transit be very accessible. Once you get past Finch, prices go way down but not having a car is rough.
Development / Construction – A lot of Toronto neighbourhoods have been transformed and continue to be developed. When condo’s spring up in neighbourhoods that have been mostly apartment buildings and houses, it drives up the cost all around. This is because condominiums are considered to be higher end and even renting one is expensive. Toronto is currently undergoing a condo infestation which is spreading rapidly and driving up renting prices in neighbourhoods. Take the case of Parkdale which for a long time has been a low-income neighbourhood and has always had affordable housing for its residents. Since condo’s have started to spring up, it is driving up costs in the rest of the neighbourhood. The residents are fighting back though, as they see this ‘gentrifying’ of Parkdale as a way to push out its long term low-income residents.
The Economy – The state of the economy directly impacts rent prices. Toronto, compared to other smaller cities and towns in Ontario and specifically southern Ontario has a very active economy. There are a lot of jobs, including a lot of high paying jobs especially when compared to smaller cities / towns. This is reflected onto the rent because it goes up at the time. To put it bluntly, people who can afford to live in Toronto do and that is taken advantage of by landlords. There is a lot of very expensive real estate in Toronto because people can afford to buy it. This has a ripple effect on the surrounding areas where people rent.
Utilities – As most Torontonians are aware, the cost of hydro has been going up. Click here for an article outlines just how much hydro has gone up in the past decade.This of course means the cost of living and renting goes up. It’s most clear to those who pay utilities aside from rent and they can see the price rising when they get their bill. For those whose utilities are included in rent, landlords just raise the rent to mitigate their utility cost.
Property Location – Rent is going to be more expensive in Toronto then it is in smaller cities like London, Ontario simply because of the prime location and everything the city has to offer. Toronto’s prime property location is shown in its real estate prices,
Air BnB – Air BnB is still largely unregulated as municipal governments figure out the best way to do it. On the one hand it brings a lot of tourism into cities but they also have to protect their citizens. Well some arguments state that Air BnB does not have an adverse effect on rent, that does not seem to be the case. If someone can rent out a room or a house in the short term for more money then they would for a long-term renter, they are going to take that route. This means fewer units are going on the market for long-term renters. This makes supply even lower while there is still high demand, and then landlords who are renting out long term rentals jack up their prices simply because they can. After all, the demand is there.