Young professionals who begin to join the workforce and move out of their parents home are actively on the search for places to live. This ultimately leaves two choices for them, rent or purchase their property. The mortgage rules have become more strict since last July, where the maximum allowable amortization and gross debt service ratio was tightened even further on insured mortgages. Roughly 80% of first time home buyers require mortgage insurance, as they have less than the 20% to put down on their property purchase. Because of this, many first time home buyers are forced to put their dream of home ownership on the back burner and continue to rent. Because of more individuals delaying buying homes, we see an increase in rent. This is very prominent in Canada, especially in Canada’s biggest rental market, Toronto (GTA).
Because Rent is starting to increase, we are getting back to the age old argument of “well…if you’re going to pay THAT much in rent, you might as well get a mortgage and become a home owner.” Recent data posted by Urbanation discusses the average rent price in Toronto is an astounding $1,856.00. This is why young professionals are encouraged to start saving very early on in their career, so they are able to jump into home ownership much sooner. By doing this, all their hard earned money will go towards home ownership, as opposed to something that will never be theirs to call home.
The condo market is heating up, not when it comes to purchases, but for renting. They are in high demand for leasing purposes, which is great is you own a condo as a second investment property in the GTA. We are seeing Rent prices rise father than purchase prices, which is great for the buyer and current home owner who has a second property, particularly a condo.
If you have any questions on first time home buying or purchasing a rental property, contact Robert Clancy, as mortgage brokers are here to provide you all your options available.