Amid the already dangerously low housing supply in the market, a Toronto condo developer is reportedly buying hundreds of single-family homes in various provinces with the intention of renting those properties.
As reported by The Globe and Mail, Core Development Group Ltd. is investing approximately $ 1 billion in purchases as part of establishing its full-scale home rental operation. The institutional portfolio – which is expected to reach at least 4,000 units in British Columbia, Ontario, Quebec and Atlantic Canada – is expected to solidify by 2026.
Key leaders argued that the time for this idea has come, given that Canada has had an average rental vacancy rate of less than 3% over the past two decades.
âWe were trying to answer the question: why isn’t anyone doing this in Canada? We couldn’t find an objective answer to this. In Canada, it works as well or better than in the United States, âsaid Faran Latafat, president of single-family home development at Core.
Read more: CMHC: Cost gap between owning and renting widens in Canada’s largest real estate markets
Corey Hawtin, founder of Core, added that demand for these assets will be driven by the ever-growing need for more space, as well as the long-term appetite of immigrants.
Hawtin said the units will bridge the missing link between small apartments and traditional high-cost single-family homes.
âImmigration is increasing, the population is increasing and buying a house or a condo has become less and less feasible. It really worsens rental demand in all of our markets, âsaid Hawtin.
For economist David Rosenberg, these arguments have merit, given the sustained growth in Canadian home prices. Data from the Canadian Real Estate Association showed that the actual national average price (not seasonally adjusted) of homes rose 41.9% per year in April alone, reaching just under $ 696,000.
âThe relationship between house prices and rental rates is so extreme that new entrants to residential real estate will gravitate towards the rental market,â Rosenberg said.
He added that an increased rental supply could have a potential chilling effect on the overall market, as every household that chooses to rent is one less household competing with other potential buyers.