After a slow start to the year, sales of new and existing homes are expected to surpass last year's as the lure of low interest rates prompts renters to move out of leasing. First-time buyers represent 57 per cent of the market this year, compared with 33 per cent in 2008.
The flip side to home ownership is that you are going to have more vacancies.
Many of those first-time buyers are moving into the condominium market, which currently has an estimated 35,000 to 40,000 units under construction. About half of those are expected to come on line next year, meaning that vacancy rates are forecast to bump up to 3.3 per cent in 2010, according to the federal housing agency.
Although condo rentals are typically priced 40 per cent higher than purpose-built apartments, "their new features, prime locations and high-quality amenities create competition," CMHC said.
The rental stock of condos jumped about 16 per cent this year.
One issue is that purpose-built apartment stock is relatively old, with more than half of the existing units built between 1960 and 1974.
Another reason that vacancies are on the rise is net migration into the GTA is expected to slow this year, resulting in fewer immigrant households looking for rental housing.
Meanwhile, a high unemployment rate among younger workers means many have opted to stay at home and out of the rental market.
About a quarter of younger workers in Toronto are employed in manufacturing or retail, according to the CMHC.
The manufacturing sector has shed 75,000 jobs this year, while retail has also been trending down.
Nationally, the vacancy rate in Canada's 35 major urban centres stands at 2.8 per cent, compared with 2.2 per cent a year ago.
Comments