Navigating the Twists and Turns of Real Estate Today

Navigating the Twists and Turns of Real Estate Today

Navigating the Twists and Turns of Real Estate Today

Ladies and Gentlemen, Tenants and Landlords, let's peel the curtain back on Canada’s current property rent situation taking a ride on the real estate rollercoaster. Statistics Canada’s latest report has brought out some jaw-dropping digits, as 'inflation is sleeping but rents are leaping', and somewhere in the mix, rent control rules are being pointed out. So, buckle up because it's time for a deep dive:

• Inflation is at a 3.1% increase as of November however, both mortgage interest costs and rent costs are soaring at 29.8% and 7.4% increases respectively.
• According to Stephen Brown from Capital Economics, migrations and rent control rules have worked together with rent-controlled units seeing ‘unusually large rent increases’ when re-leased.
• The rental increase cap of 2.5% in Ontario, Quebec, and British Columbia, Canada's three most populated provinces, is limited to buildings occupied before 2018. In Alberta, there are no rent control rules whatsoever; however, around 85% of Canadian tenants have some degree of rent control.
• New data suggests that when a tenant moves out, landlords tend to raise the rent vastly to match the market rate. For example, in Toronto, a rent-controlled apartment which rented at $1,700 in 2020 would be listed closer to market rent, currently around $3,500, once re-released.
• According to the Canada Mortgage and Housing Corporation, in 2022 landlords raised rents by 18% for new tenants, compared to only 3% for existing tenants.
• Changes in factors like immigration or labour market conditions could alter the rent inflation trajectory.
• Predicting the future, rent inflation might slide down from the current 7.4% to an average of 5.7% in 2024 and further to 4.3% in 2025.

So, what's my spicy take here? Totally thrilling! While this property pandemic (a term I just made up, you're welcome!) spirals on, it sure serves as a wake-up call for future tenancy agreements. Facing such rent hikes, tenants may start searching more diligently for properties built post-2018. However, don't let the skyrocketing rent costs get you down because remember, even the biggest rollercoasters have their dips! And as for landlords, it might be a good time to play the market and seize the opportunities while they last. Keep your popcorn popping because the ride is far from over!


Source: Storeys

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