Happy New Year Landlords! It is no secret that the market is hot! And I can feel the temperature rising… suggesting we are going to have an incredible strong year in 2020. Are you ready?
We hope this report helps you in your planning for the year ahead.
2019 was another exceptional year for owners of multi family properties. Cap rates have continued to compress downwards, and per unit prices have climbed to incredible all-time highs. But this is a message I have been sharing for years… so what is going to happen as we move forward?
TRENDS FOR 2020
CASH IS KING
If you are a buyer of apartment buildings – it is vital to be well capitalized in order to compete and purchase properties. There are many buyers out there flush with cash from refinancing other properties that have also increased in value in recent years, or new buyers looking to get into the market.
SUPPLY WILL REMAIN LOW
We will continue to have a shortage of apartment buildings available for sale to meet investor demand. This is not a new trend, however we do anticipate availability to tighten in 2020, as many owners considering selling may have done so already, and also the number of buyers coming into our market has increased – only adding to the imbalance of supply and demand as we move forward. This is terrible news if you are a buyer, but great news if you are considering selling a property in 2020.
RENTS WILL CONTINUE TO RISE
Landlords were blown away by the velocity of rental rates increases in 2019 and this will continue well into 2020 and beyond. Locally our economy is very strong – businesses are growing, and employment opportunities are on the rise. Our market is also more affordable than the GTA so we have people moving here simply from an affordability perspective to commute to Toronto and surrounding areas. Nationally, we are benefiting from the immigration policies of our Government – and newcomers to Canada are most likely going to rent when they first arrive in Canada. All of these factors are contributing to a housing affordability issue – and as this increasingly becomes an issue in urban centers, we expect to see governments at various levels attempt to intervene to find solutions to this problem.
Have you noticed how many cranes you see throughout our Region currently? Driving through our downtowns and arterial roads – it is evident developers are taking note of the increased demand for housing. With rents and housing values on the rise – the economics finally make sense for developers to build new, purpose built multifamily apartment buildings in Canada. We have not seen construction of apartment buildings like this since the 1960’s and 1970’s. However, new construction is not a simple task in today’s market – as land prices and construction costs have soared – making development projects not for the faint of heart.
Check the report above to get know more about the average sales price of apartment building and a comparison of the year that has passed and what is coming.
If you have any questions contact us:
15C-370 Highland Rd W