A 3-bedroom house in Riverdale for $5,000 a month. A $9,950-a-month modern dwelling with grand cathedral ceilings near Casa Loma. A Wychwood residence nestled steps away from Hillcrest Park for $6,980 per month.
We see them all over the city — upscale homes decked out and put up for rent, often at extraordinary monthly rates.
But who lives there? Why, if they have that kind of cash, do they rent? And how do they fit into the overall health of Toronto’s housing market?
Pricey single family dwellings are rented out by a range of clientele, according to Toronto realtors. Daniella Gold of the Harvey Kalles Real Estate Brokerage said fly-in executives are often regular shoppers for these types of properties.
“There are people who are working for companies that send them to Canada where they generally have accommodations paid for,” Gold said. “So that’s definitely one.”
This type of rental is essential to attracting top talent to the city, according to James McKellar, professor of real estate and infrastructure at York University’s Schulich School of Business. “It enhances labour mobility at the upper end,” he said.
Erica Reddy-Choquette, broker of record at Royal LePage Signature Realty Erica Reddy Brokerage, has also seen families who are renovating expensive homes lease out big-ticket rentals temporarily while their permanent residence is remodelled.
“Someone in a higher-end home, doing a higher-end renovation will typically look for a higher-end rental to live in in the interim,” Reddy-Choquette said, noting families who’ve sold luxury homes and are looking to downsize also tend to shop for these types of rentals.
These rentals are needed to keep their tenants from otherwise shopping around in lower end markets, according to Mandy Hansen, principal at Insight Specialty Consulting.
“It’s like going into a Louis Vuitton store and complaining the purses are too expensive,” Hansen said. “They are, but that’s the market.”
When it comes to purses, there are many affordable options on the market if Louis Vuitton is out of your price range. However, the housing market is not quite the same, Hansen noted.
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Opposition housing critic Jessica Bell agrees.
“Toronto’s housing market must be able to provide rental options for people at all types of income levels,” said Bell, NDP MPP for University-Rosedale. “From high-income, to middle-income, to lower-income levels.”
However, while those with a higher income typically have many more housing options available, those at other levels are left to struggle, she says.
According to Toronto’s Vital Signs 2021 Report, more than 11 per cent of apartments renting for more than $2,550 per month last year were vacant compared to the 0.6 per cent of units left vacant that were renting for less than $625 a month.
Data from the Canada Mortgage and Housing Corp. shows that nearly all vacant units are not affordable to the bottom 40 per cent of the population — who cannot bear more than $1,174 in rent.
“People from principals to teachers to baristas to delivery workers are having difficulty finding a stable home,” Bell said, noting those with lower incomes face the most difficulty.
To counter that high vacancy rate for pricier rentals, the NDP has put forward a motion calling for a province-wide two per cent vacancy tax applicable to homes left vacant for more than six months of the year, with the money redirected to building affordable homes, the same type of tax proposed by other levels of government.
The city of Toronto recently asked residents for their input (via a survey) on a vacant homes tax meant to sway property owners to rent or sell their unoccupied residential spaces. Mississauga is considering implementing a similar tax, Ottawa will have one in place by 2022 and Vancouver has had one since 2017.
Federally, a one per cent tax on foreign-owned homes — that would take effect Jan 1. — has also been introduced into Canada’s budget.
The only way to bring down the cost of high-priced rentals, according to Kellar, or stop prices from getting more expensive, according to Hansen, is to build more affordable housing in the city.
“If we are choosing to not let housing get built, then supply and demand will rule and it’s going to get more expensive,” Hansen said.
Irelyne Lavery is a Toronto-based staff reporter for the Star. Reach her via email: [email protected]
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