Real Estate: Bidding wars on the rise for high-end rentals

Once the territory of sales, multiple bidders now fight over leases

Bidding wars are suddenly common in the rental market this fall as the effects of a tight housing market spread.

“Because the housing market so difficult people are saying, ‘Forget it. I’m just going to rent until I can find something,’ ” says Sherille Layton, Sotheby’s International Realty Canada. “They may have moved out of a house but can’t find a new one. So they have to stay somewhere.”

According to the latest stats from the Toronto Real Estate Board, the amount of properties available for sale on the market has dropped 15 per cent. The resulting imbalance in supply and demand is creating ripples in the rental market.

Layton mentions a recent loft in Leslieville listed for rent by a colleague. The bidding went into multiple rounds. “I’m doing a rental this afternoon that has two offers. It’s a property that rents for $5,000 a month,” she says.

So intense is the demand that according to data from market research firm Urbanation, the cost to rent in the GTA advanced another five per cent in the most recent quarter.

The firm predicts another five per cent increase in rental rates in the next quarter as well. Smart renters are showing up at meetings with landlords with credit checks, a certified cheque for the down payment and letters from employers and references — anything they can find to make it easy for the owner to say yes.

Could an uptick in the construction of more rental properties help ease the situation? Perhaps.

The large Kingsclub project at the corner of King Street West and Dufferin Avenue was slated to be a condo but will be finished as a rental building instead. And there are other rental units being built in the city, which will provide relief. But a sudden new topic of conversation is the potential for a flood of foreign buyers in Toronto as the effects of the new 15 per cent tax for foreigners on Vancouver real estate takes effect. It could shift the focus of foreign investors to Toronto.

Both politicians and economists mused this past week about the need to apply a tax in Toronto similar to the one in Vancouver lest a flood of foreign investment dollars land in the city’s real estate market, driving demand even higher over the short and medium term.

“The lack of supply is killing us. Every month listings go down and sales go up. Eventually we’ll all be bidding on the same single house,” says Laurin Jeffrey, an agent who practises on Queen Street in the west end.

“The problem is, as prices keep rising, it is hard for current owners to move up. So that’s one less house on the market. They are all deciding to stay put.”

Article exclusive to STREETS OF TORONTO