The housing market has begun cooling down after breaking a new monthly record this May, with a 39% year-over-year increase. The Canadian Housing Market News report found that home sales were down by 10.4% from March. However, the market affordability is still out of reach for many Canadians. Recently, a Toronto condo developer, Core Development Group Ltd. announced the purchasing of $1-billion worth of homes to double the rental supply.
According to The Canadian Real Estate Association, the national average home price in May 2021 was up 38.4% from May 2020. Thus, reaching record activity for the month with the number of transactions increasing. As a result, people will continue to gravitate towards the rental market.
Currently, there is a significant lack of rental availability. However, with Core’s plan, each single-family rental home that comes on the market, two rentals will be provided. This will double the housing supply. Core said via email, that they are “committed to creating build-to-rent and build-to-own models throughout Ontario to help meet the housing supply shortfall”.
Nonetheless, if more potential home buyers are forced to rent, it could reduce the competition in the real estate market. Therefore, $1-billion worth of homes to double rental supply will create 8000 rentals. By doing this, it will eliminate competition with buyers and favour family focused rentals.
Additionally, there is a large concern regarding this transition. The concern stems from the change in retail to corporate landlords. Although, RE/MAX Escarpment’s Rob Golfi says, “this switch will provide protection to renters”.
Core’s aim of injecting the market with more rentals will provide finished homes for tenants. Through their models, it will ease “common burdens tenants face by way of renting from individual or foreign investors” says the Core team. Naturally, there are many mixed feelings circulating about this future project. The Core team believes they will be able to give families affordable housing in the current real estate market.
There are many positive outcomes that will arise from this project. The Core Team will be renovating all of these units. This will “provide a safer living environment, including upgrades to heating, plumbing, insulation and light to the highest energy standards” says Core.
On the other hand, this investment is likely to start a trend. Companies will follow the Core Development Group, seeing this as an opportunity to control the rental market. “The issue with corporate landlords is that they own and operate a large portion of the rental market” says Golfi. “This means that if you are rejected from a rental in the area, you will have a difficult time being approved when the same company controls the rental market.”
With that being said, it may ignite a shortage in the market and increase property values. “The smaller the city, the larger impact this project will have” says Golfi, “cities like Hamilton and Brantford will see the affects, while Toronto won’t feel it as much”.