By Mahnoor Sherazee
Rental prices in the Greater Toronto Area (GTA) have increased an average 18-22% when compared to pre-pandemic times. November data from rental website Zumper.com records a 17% increase in Milton over the same time last year.
The average going rate for a one-bedroom condo/apartment in Milton is $2,200 while a two-bedroom would at least go for $2,700 according to Abbas Ahmed a real estate sales representative for Right At Home Realty Inc “That’s at least a $300 increase compared to pre-pandemic prices,” he says adding that townhomes, a popular rental option for Miltonians, now range between $2,800 to $3,300.
Then the Bank of Canada raised interest rates and the housing market hit a slump. In 2022, the economy got a double whammy of 6.9 percent inflation with a 3.75 percent interest rate. Its ripple effects include potential buyers realising their down payments were insufficient, people holding off buying homes till interest rates lowered again, and homeowners finding it more lucrative to rent their properties than resell for the time being.
Milton is home to over 124,000 people with a 22 percent rise in population since 2016 according to the 2021 Census report. New construction to meet the uptake in residents has been slow. Simple economics of high demand and the limited number of rental units available has further driven up the price.
While the rising prices are beneficial for landlords it has also made them more cautious while sifting through rental applications to approve. “Just by looking at a rental application from a single-income household, I know the landlord will deny it. With such high rents you’re looking at people paying close to, if not a little over, 50 percent of their income on rent,” says Batool Saleem who is a realtor with Re/Max. And if such an application does get approved it most likely means the renter has paid at least four months’ rent as a security deposit to ‘show good faith’, she adds.
The question now is why Miltonians are willing to put up with high rental prices and unfavourable landlord stipulations. The answer is as simple as it is disconcerting.
They have no choice. Having moved to Milton a little over a decade ago after being born and raised in Mississauga Jeeny S says the reason people moved to the town was that it was affordable. “It’s where you moved to if you were a new, young family looking to buy a home.”
Jeeny says she sold her stacked townhouse for nearly twice the price that she purchased it for five years prior, during the resale market boom five years ago. Others benefitted during the same time.
Many people may have moved to Milton in the hopes of buying a home. They ended up renting, in some cases, the same property because they couldn’t afford a mortgage realtor Batool Saleem says. Still, they’re paying less as a renter than they would have to as homeowners in mortgage payments.
What’s keeping people in Milton?
The reasons are as plenty as they are diverse. It could be children being settled in school. New immigrants finding it relatively cheaper than other areas in the GTA, being away from the city hustle and bustle, or even the hope that prices will come down and they’ll be able to buy soon.
Mustafa Patwa, 28, sold his home earlier this year but is reluctant to commit to another mortgage yet. “It’s definitely cheaper to rent in the short term,” he says. However, the uncertainty of lease renewal, and unforeseen rental price rises discourages him from doing so long-term. Having a background in economics and finance, he says he has a number in mind of how much interest rates, mortgage payments, and housing prices would work out to make him retransition from renter to homeowner.
The overall renter-to-landlord ratio is down by 18 percent, says realtor Abbas Ahmed. While the statistic is not specific to Milton, it offers good insight into what the town is experiencing.
There also appears to be a third option. “Most of the people living on my lane are now making their basements to rent them out,” says Sana who only wanted to be quoted by her first name. Sana migrated to Canada in 2015 and chose Milton to buy her first Canadian home. In her opinion, the extra rental income gives people the ability to afford to pay their mortgages.
Canada is expecting to welcome close to 1.5 million people over the next three years. If previous trends are any indicator a significant portion of migrants will move to Ontario, and most of them will choose Toronto and the GTA to call home. One of the previous go-to locations to settle in, Mississauga, is seeing rocketing price increases. Milton remains more competitively priced, even with the increase in rental prices.
Interest rates expected to lower back to around two percent by the middle of 2023, its impact on the rental market is yet uncertain.
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