A bidding war for renters?In Ontario, tenants and intermediaries say this is a new reality
Although the price of renting an apartment in some major cities May have fallen During the pandemic, high prices in the housing market seemed to have a knock-on effect on single-family rental housing in Ontario.
This situation has led some experts to believe that there may be a bidding war in the foreseeable future.
“I have never seen anything like this before,” said Sue Heddle, a real estate agent with nearly 15 years of experience in cities such as Mississauga, Oakville, and Burlington in the Greater Toronto Area.
Heddle said that she often sees tenants bid higher than the rent price and offers several months of advance payment. One of her clients recently listed a house with a monthly rent of $700 higher than the announced price.
“Every ordinary place has a bidding war,” she said.
Real estate agents and other experts say that the shortage of rental housing has become particularly acute in some areas of Ontario, as in most parts of Canada. Dealing with housing affordability issues. They worry that the problem will get worse with the establishment of a new family or arrival through immigration.
Afshin Livar was caught in a number of bidding wars last month when he was looking for a rental home for his family of five in Richmond Hill, a suburb of northern Toronto.
“I feel extremely depressed and desperate,” Lival said. “You can keep bidding, bidding, bidding, and then unsuccessful. So that makes it very stressful.”
A tricky issue to track down
There is no comprehensive data source for tracking the prices of rental houses, let alone tracking the statistics of bidding wars.
But Dana Senagama, an economist at the Canadian Mortgage and Housing Corporation (CMHC), said the bidding war for rental housing is a by-product of rising house prices.
“Traditionally, whenever the ownership market is very hot,” she said, “it will almost repeat itself in the rental market.”
CBC News interviewed more than a dozen real estate agents and tenants who described the bidding war for rental housing.
In fact, there are not many houses available for rent now.According to CMHC data, Over 90% of detached houses in Canada are owner-occupied, Leaving less than 10% vacant or potential rent.
CMHC data also shows the average rent of all housing types in Ontario cities Ottawa, Toronto, Hamilton, London and Windsor rose 4.7% to 8.4% in 2020 ——Although the vacancy rate in almost all these cities is increasing. (Hamilton is an exception.)
The Canadian Real Estate Association (CREA), which runs Realtor.ca, said it does not track data on rental properties because they are only a small part of its list.
Ralph Ciancio has been selling homes in Markham and other areas in northeast Toronto for more than a decade.
He said that in the past, only very attractive rental houses could have net quotations higher than listed prices. Bid wars are common nowadays, because people fight for the few listings in his area.
“The ongoing bidding war is out of tenant needs,” he said.
Intermediaries and renters in the Ottawa area interviewed by CBC News also described the extreme shortage of rental housing, and some people encountered a bidding war.The situation is also happening Small cities in Ontario.
Watch | Why is real estate in small towns heating up like big cities:
Renting is as stressful as buying a house
For his part, Livar was so worried about finding a rental house for his family, so much so that he said he was actually pulling out some of his hair.
He moved to Canada from Hong Kong in 2019 and is still doing business there. He said that his wife has a job here, but the family savings are already stretched.
Seizing the booming real estate market, his landlord recently sold his five-bedroom house in Richmond Hill, his wife and three children, for a monthly payment of $3,500.
While looking for a new place to live, Lival said he had applied for a house for $3,800 per month. Its price is US$4,600.
After reviewing dozens of listings, changing real estate agents, and failing in eight bidding battles where he offered higher than listed rents, his ninth offer was accepted.
The new rent for this family is smaller and older, at $3,900 per month, which is $400 higher than what they had previously paid. In addition to providing additional funds, Lival also paid four months’ rent in advance to close the deal.
The process he faces is similar to the blind bidding process common in real estate, although This practice is under scrutiny May fan the flames of an already hot market driven by desperate buyers.
Lival said that his experience made him wonder whether some rental bidding wars were made by landlords and intermediaries because “they know what they are playing.”
Candice Sheedy, an entrepreneur and a single-parent family of three boys, also struggles to find a rental house.
Sheedy paid 3,000 yuan a month for a three-bedroom house in Oakville, Ontario, but was forced to leave after a dispute with the landlord.
She said she applied for 20 houses within a few months, but lost in more than a dozen bidding battles, even with an additional $400 per month and six months of prepaid rent. She said she has a good credit score, stable income and savings.
“It doesn’t make any sense,” Sidi said.
She said the combination of bidding wars and rejections “brought great pressure, especially because it is an epidemic.”
Sheedy just moved into a house she found in Kijiji, but did not bid, but it is smaller, located in a less than ideal area, and is still nearly $500 higher than her previous rent per month.
The pandemic’s premium to space
Murtaza Haider, who teaches real estate management at Ryerson University in Toronto, said that the pandemic has made space more valuable, which has exacerbated Canada’s housing affordability crisis.
He said that for many people, the public health measures related to COVID-19 make the home more than just a place to sleep and eat; our home is now also our office, school, gym, and church.
He believes that the lease-based bidding war is the result of the pandemic, which exposes the importance of houses providing additional space for owners and tenants.
“The value of the house-the intrinsic value-has increased,” Haider said
He said that the other part of the problem is that Canada has “years of construction time” for detached houses, semi-detached houses and townhouses-ground-level homes that many families desperately want.
CMHC statistics show that in Toronto, for example, 37.7% of the residential construction projects started in 1990 were houses.
By 2020, the housing start rate will only drop to 15.2%.
During the same three decades, the operating rate of apartments and condominiums rose from 51.3% to 72.7%.
Will the bidding war for rental housing get worse?
Real estate agents and experts worry that housing rents will continue to rise in the foreseeable future, which may trigger more bidding wars.
As Senagama predicts, as prices get higher and higher, single houses will become these “very rare commodities.”
Ciancio worries that as the number of immigrants increases after the pandemic, “purchasing demand and rental demand will soar”, which will exacerbate the problem.
Haider’s fear lies in Millennials with children in the next ten years It will also drive a large demand for houses because they will not “look for a one-bedroom or studio apartment.”
From the overall perspective, Haider sees two solutions to the housing crisis: the government must create more affordable housing options, including ground-facing housing, and may also need to subsidize rents.
“Rents linked to income are something that the country and society must invest in to provide fair housing for everyone,” he said.