Is Airbnb having an impact on the Toronto condo market? The simple answer is yes – it’s actually having a huge impact on the condo market and there is a big group of buyers that should be taking advantage of the current situation.
A sharp drop-off in travel and tourism in Canada’s biggest city because of COVID-19 has walloped the market for short-term rentals such as Airbnb and the effects now appear to be rippling through the real estate sector.
A two-month ban on short-term rentals in Toronto was lifted June 5, but travel restrictions and fear of the virus mean that tourists are staying away and how long this will last remains uncertain. That has forced many short-term rental investors to consider switching to long-term rentals or putting their properties up for sale.
To get an idea of what impact this is having on the Toronto condo market, investors and renters, online realtor Zoocasa looked at a snapshot of 10 condo buildings in downtown Toronto that permitted short-term rentals or were popular on Airbnb. The report found that new listings for long-term rent or sale in these buildings were “dramatically” higher than in the neighbourhoods where they were located and, in the city, overall.
Market Snapshot: Airbnb & Toronto Condos
Overall Toronto new listings in June for condo rentals grew 83% from the year before with 6,845 units added to the market. In the Airbnb-friendly buildings that Zoocasa studied rental new listings leapt 257%, with 350 units listed in June compared to 98 last year.
One building, Ice Condos I & II on York Street, saw a 547% hike in new listings, with 97 units coming on to the market in June compared to 15 during the same time last year. The 97 units represent about 7% of the total units in the building.
Students were among the first to give up their rental leases early in the pandemic, followed by those who lost their jobs during the lockdown and others who no longer felt they had to live close to the office because of remote working.
It’s a very different market than a year ago when rental vacancies were at a record low. Some condo investors are getting out altogether. New listings for sale in the 10 buildings Zoocasa studied were up 108% in June with 131 units listed compared to 63 last year. Overall in Toronto, 3,315 condo apartments went on the market that month, a 36% increase from the year before.
What’s to Come for Airbnb & Toronto Condos
With travel restrictions still in place and some condo buildings looking to ban Airbnb for good, those who invested in pre-construction with an Airbnb strategy are under a lot of pressure. Right now, the rental market is feeling the impact, as short-term rentals turn into long term rentals. And there are thousands of them on the market.
But what’s going to happen when these rentals sit, unrented for two months? I’m predicting most of these novice investors are going to be listing their condos for sale, flooding the market with entry-level units that have been kept up quite well.
First Time Buyers: It’s Your Time
With the number of condos expected to flood the market during the fall season, first-time buyers should be watching this very closely. This could be the best time we’ve seen in a long time to get into the Toronto market by purchasing your own condo.
Even those who are currently renting and nearing the end of their lease – perhaps it’s time to turn that rental payment into a mortgage payment and put some money into your own pocket.
Airbnb suites are typically in very popular Toronto neighbourhoods, and are smaller units to appeal to couples or business travellers. With many of these coming to the market, prices will be competitive, and you’ll have your choice of many condos to pick from.
It’s time to start your wish list and look into what neighbourhoods you want to live in – even what buildings you like and don’t like. Start looking at amenities, sizes, views, and talk to a Broker about setting up a weekly email so you can see what’s coming on to the market.
It’s also time to get your finances in order. Talk to a mortgage broker about getting a pre-approval and determine what your down payment is. If you’re coming up sort, talk to mom and dad about a loan.
This could be your opportunity to take advantage of the impact Airbnb is having on the Toronto condo market – the only part of the real estate market that will take a slight hit due to COVID-19. And get ready to act fast – those who were waiting back in April to purchase a house because they thought pricing was going to come down, are now looking at paying significantly more for a house today.
Don’t let that happen to you – get ready to jump on this opportunity that won’t last long.
If you want more information on what’s coming up for first-time buyers, simply fill out our form below. We would be happy to help you plan, send you listings to look at and strategize on how you can own in Toronto sooner than you think.