Carol Endicott ventured into Toronto’s condo market for the first time a few months ago and found herself caught up in a bidding war with four couples.
Only thing is, she was looking to rent, not buy, the two-bedroom unit.
One couple was offering $2,700 a month — $700 over the $2,000 asking price — for the spacious unit at Mount Pleasant Rd. and Davisville Ave., with its showcase kitchen and main-floor gym, all within an easy commute of downtown.
“Toronto is booming with young professionals and they are pretty set in their minds what they want and what they can afford, so it gets a little competitive,” says Endicott, 32, who works for a major public relations firm.
“I hadn’t looked for an apartment in four years and I couldn’t believe it. I called my parents and they said, ‘Don’t get sucked in. Do not offer more than $100 more.’ ”
Related: Condo boom backfiring on renters
In the end, Endicott and her roommate were shocked to find they had the winning bid, at $2,100. The condo owner thought they had good jobs and would take care of the place.
With the vacancy rate now hovering around 1.4 per cent — down from 3.5 per cent in 2009 — demand for glass-and-granite condos has become incredibly intense in central Toronto, where the condo boom has created the illusion of lots of supply, though there’s not yet enough to keep up with rental demand.
Condo investors own an estimated 30 to 95 per cent of units (depending on the building) in the newer high-rises cluttering the Toronto skyline. And they are finding a line-up of potential renters at their doors. And with the bulk of condos sold during the recent boom unlikely to actually be built for another three to five years, competition could remain intense for some time.
“I tell all my clients, ‘Don’t even start looking until you have all your paperwork in order,’ ” says Olenka Mallon, a ReMax agent who advises tenants to come armed with a good credit score, a letter of employment and salary and maybe even a reference from a previous landlord.
“People who make good money but don’t have a great credit record get really upset about this. I only take on AAA clients now. That’s how tight the rental market is.”
Mallon had one client take a unit sight unseen. She begged a property manager on behalf of two clients who had already lost out on three other condos.
Competition is especially intense along the Bay St. corridor, where a perfect storm of students and professionals are all jockeying for space, and are willing to forgo the cost of a car to pay for it.
Even the up-and-coming Corktown area is in high demand, says Sharon Golberg, who runs DASH Property Management, one of many companies that help investors who want good tenants but not the hassle of finding them.
That professionalization of the rental condo market — at a time when almost no new rental apartments are being built — means condo owners can set the bar high on who they will take and for how much.
Just this week, Golberg had four bids within 24 hours, some over the $1,695-a-month asking price, for a brand new one-bedroom plus den on Trinity St.
The unrelenting demand for Manhattan-style living has helped drive up condo rents about 20 per cent in the last two years, realtors say, and is forcing more renters to consider doubling up, even in one-bathroom, one-bedroom units with dens.
Related: Arizona dream home revisited
“The downtown crowd has more means to go to multiple offers,” says Golberg. “They are young professionals. They work long hours.
“They do the math and they are willing to pay for the convenience of walking back and forth to work, even home for lunch, and it benefits them to pay more per month for the lifestyle.”
Competition for rental condos is expected to ease over the next five years, as some 52,000 condos now under construction across the GTA come to market and the record 28,000 sold last year get built.
But the high cost of housing, and uncertainty about the softening market, means potential buyers are likely to rent longer.
That includes Endicott, who has these words of advice:
“Stay strong. Don’t give up. And have a good credit rating.”