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Toronto tops world list in housing prices vs. rental costs

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Real Estate Professional | 23 Nov 2015, 08:15 AM Agree 0
Toronto has the highest housing prices in relation to its rental rates in a new list comparing 26 markets across the globe
  • PJ | 26 Nov 2015, 12:35 PM Agree 0
    you should post a link to the report unless you already did, which i cannot see.
  • Matt | 27 Nov 2015, 11:13 AM Agree 0
    The problem I have with this is this so called "Canadian market". There is no such thing, and any real estate professional will tell you the same thing. There is a Toronto market, and a Vancouver market. A Hamilton market, a Brantford market, a Fort McMurray market...but no "Canadian market".

    I have no doubt that there are markets, such as Toronto or Vancouver, that are overpriced and will see a correction sometime in the not to far off future. But each region's market is different, and drastically so. Mashing it all together and making sweeping statements like "Canada's housing market is overpriced, and needs to see home prices drop" not only spreads fear and doubt in buyers everywhere, but it's completely false.

    Where I'm from (south of Toronto), it is more affordable to buy a home than to rent one, if you can qualify for the mortgage. Vague articles like this that point to a survey and make broad conclusions from it drive me nuts.
  • | 27 Nov 2015, 06:19 PM Agree 0
    Please define what you mean by "overvalued." If there is a demand then it has to be met. If supply is low then it's natural for the prices to go up. In the central part of Toronto, inventory has been such for many years. With continued immigration, where are people going to live?
  • max | 28 Nov 2015, 11:02 PM Agree 0
    Rather than house pricing be too high it could rent is too low. I'm renting in the East Bay area of California, house prices are lower than Toronto but rents are absolutely insane. Rundown one bedroom apartment beside a highway in the East Bay area for $3000/month that in Toronto they'd be lucky to get 1500.
  • Matt | 29 Nov 2015, 01:45 PM Agree 0
    Max, you're probably right about rent prices being low. If they go up, however, it will put a lot of people in a very tough position. In my area you can rent that "rundown one bedroom apartment" for as low as $400/mo. The average 3 bedroom house will rent out for $1,200-$1,600/mo plus utilities. It probably seems like almost nothing for someone in your position, but here, if it goes any higher, it risks becoming unaffordable for many.

    That being said, I would still like to see rent prices go up here, if only by a bit. It's hard for several of my clients who own rental homes to maintain them, simply because the money isn't there. People have to remember that when you pay rent, that cost has to cover a mortgage, taxes, and maintenance. And hopefully some left over for the owner to make a bit of profit.
  • smayer97 | 01 Dec 2015, 02:18 PM Agree 0
    @Marett, And I would argue that in large regions like Toronto, you have even more micro regions where one is going up while another is flat or sometimes even going down.
  • smayer97 | 01 Dec 2015, 02:19 PM Agree 0
    that should have read @Matt
  • Matt | 01 Dec 2015, 07:19 PM Agree 0
    @smayer97 you'll get no argument from me on that point. I see different trends happen between small towns here (population 4-7k) that are only a few km's apart, so it only makes sense that in densely populated cities that you'll experience "micro regions". All the more reason to pick apart studies like this.
  • Julie | 07 Dec 2015, 08:13 AM Agree 0
    I totally concur with Max's insights...
    travelling around California and Europe this summer I found the same thing. Rents could be higher in Toronto to reflect the value of the land but real estate is cheaper by comparison to other cities around the world. My son has a lovely new studio apartment downtown Toronto for 1100/month - why would I buy anything?. Meanwhile, young people in California and Copenhagen are having to rent rooms and in some cases, SHARE rooms, in order to make a go of it. Now THAT seems out of whack. However, this rental issue will be sorted out in Toronto with the trend of developers moving from building condominiums to building higher end rental units.
  • markp | 27 Mar 2016, 11:43 PM Agree 0
    Its not demand driving the housing market upward..its cheap money (aka historically low mortgage interest rates). If these were to go up many could not make their monthly payments and the banks would foreclose. if you look at history, mortgage rates are typically 7-8%..not 1-2%. cheap money trumps demand and what is causing overvalued homes.
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