At a Glance:
Average Detached Home Price: $535,944
Vacancy Rate: 3.1%
Average Rent for 3-Bedroom House: $2,132
Hamilton is a port city in the Greater Horseshoe Area and is Canada’s 10th largest municipality. As of 2018, the vacancy rate in Hamilton is 3.1%, which is considered the minimum for a healthy rental market.
In 2019, Hamilton rental rates increased a staggering 24%, the highest in all of Canada. What else makes Hamilton an attractive city to own rental property in? It is home to several post-secondary education institutions including McMaster University and Mohawk College, where many students rent housing. The cities proximity to both the QEW and 403 make it an excellent location for commuters who may be priced out of renting in the GTA. The GO Transit expansion into Hamilton will further increase desirability.
There are many diverse neighbourhoods in Hamilton that result in varying home prices and rental rates. The Realtor® Association of Hamilton and Burlington November 2019 market report notes that in the Hamilton Centre, the average home price is $402,147, whe re as in Hamilton West, the average home price is $546,438. Hamilton East and the Hamilton Mountain fall in between those figures. The average rental rate is $2,132 for a 3-bedroom home, but your rental rate will depend on location and what other landlords are charging for similar product in the same neighbourhood. Do your research on what neighbourhood you want to invest in for your budget.
At a Glance:
Average Detached Home Price: $501,201
Vacancy Rate: 1.5%
Average Rent for 3-Bedroom House: $2,479
Canada’s capital city is home to affordable housing and is the nation’s fourth largest city. As of 2018, the vacancy rate in Ottawa is a low 1.5%, meaning there is a shortage of rentals for the current demand. Most owners live in detached homes throughout the city, whereas renters, who mostly live in apartments, are more concentrated in the city centre.
Known as Canada’s “most educated” city, Ottawa is home to an educated population with low unemployment rates. This combination will likely yield reliable renters with a stable income.
The City of Ottawa reports that, “the rental market has grown in supply (number of rental units) by approximately 1% between 2016 and 2018, while over the same period, the population living in rental accommodation has grown by a faster rate of 2.9%.” Considering this data and the low vacancy rate, now is a great time for investors to purchase residential homes and rent them to Ottawa residents.
A big draw of owning a rental property in Ottawa is it is home to several post-secondary institutions, including the University of Ottawa, Carleton University, and Algonquin College. Students are often good renters since they usually rent for several years and have parental financial support, or a rent guarantor. Ottawa was also ranked as the third best place to live in Canada, which makes it a draw for both homeowners and renters. At present, rental rates in Ottawa are forecasted to raise 41% between 2018 and 2031 – that’s great news for investors!
At a Glance:
Average Detached Home Price: $335,898
Vacancy Rate: 2.5%
Average Rent for 3-Bedroom House: $1,463
Windsor is probably best known for being the “automotive city” that’s close to Detroit. And although that is true being Canada’s most southernmost city, Windsor is also known for being culturally diverse with affordable housing prices and a strong rental market.
The vacancy rate in Windsor in 2008 was nearly 14%. In 2018, it was at 2.5%. This is a testament to the growing demand for rentals across Canada, with national vacancy rates in metropolitan areas standing below the healthy 3% benchmark at 2.2%.
Windsor rental rates have been on the rise with a 15.5% increase from June 2018 to June 2019. The increase in monthly rates does not reflect the housing prices, which makes this city attractive for real estate investors. The average home price is $335,898 which is well below the national average of $529,000 reported by the Canadian Real Estate Association (CREA). This national average is heavily skewed by the GVA and GTA, but even with these markets excluded, the national average would still be higher than Windsor at $404,000.
The Gordie Howe International Bridge is a much talked about upcoming draw for Windsor. The public bridge will connect Detroit and Windsor over the Detroit River; completion is expected for 2024. This southwestern Ontario city is on the rise and now is an opportune time for investors to take advantage of affordable housing prices with growing rental rates.
At a Glance:
Average Detached Home Price: $565,042
Vacancy Rate: 1.4%
Average Rent for 3-Bedroom House: $2,300
Known as “The Royal City”, Guelph is a manufacturing city with the lowest unemployment rate in all of Canada. The city’s strong economy makes it a leader in national growth, outpacing the provincial and national averages. And to boot, Guelph is home to the University of Guelph with over 21,000 students enrolled. These factors should be appealing to investors, since renters are likely employed in this growing city or will be a university student with a financial guarantor.
Like many popular Ontario cities, Guelph rental rates are on the rise as people are priced out of the GTA. Guelph’s vacancy rate is almost half the already low national average, making it a city with urgent demand for rental properties for both residents and students.
Guelph is a great city to invest in because it is a desirable place to live. Investors will likely be able to find credible tenants with stable incomes, as well as reap large benefits on the resale value of the home purchased when the time comes. Situated 60 minutes from Toronto and 45 minutes from Hamilton, we suspect Ontarians will be heading to Guelph over the next several years as the GTA and GHA become further inflated by the imbalance of supply and demand.
At a Glance:
Average Detached Home Price: $403,300
Vacancy Rate: 2.2%
Average Rent for 3-Bedroom House: $1,499
St. Catharines is the largest city in the Niagara Region with a population of 133,113 as of the 2016 census. Situated squarely between Buffalo, New York and Hamilton, it’s a city with lots of value for residents who like to visit the USA while living near Lake Ontario and major highways. Known as the “Garden City”, it is home to 1,000 acres of parks, trails and gardens, in addition to being home to world-class wineries.
When looking at housing in Ontario, it is known that home prices get more affordable as you move westward along Lake Ontario from Toronto, and St. Catharines reflects that. The average home price is $403,300, well over $125,000 difference from the not-so-far away Hamilton region’s average home price. And with the upcoming GO Transit expansion including a stop in St. Catharines, it isn’t likely this Industrial city will remain “affordable” for long. Commuters to the GTA will likely see St. Catharines as a cost-effective location for homeownership, since many buyers, especially first time buyers, are priced out of the GTA, and many even the GHA.
Affordability coupled with a solid rental market makes St. Catharines an excellent place for investors. The vacancy rate of 2.2% showcases the demand for rental housing. Like many of the other cities we are recommending to investors, St. Catharines is a “university town”, home to Brock University which has a student enrollment of over 19,000 students, but only enough on-campus housing for 2,400 students. In July 2019, Brock University put out a call to landlords to offer rentals in St. Catharines, with the school’s Director of Student Life and Community Experience Brad Clarke encouraging landlords to contact the school directly with vacancies that can be filled by students. Looking at the demand for rentals from students and residents alike, St. Catharines is a great city for landlords in 2020.
Beyond Purple Bricks’ top five choices, there are many desirable cities in Ontario to invest in, including Brantford, Kitchener/Waterloo, and Barrie. There is a demand for rental properties in most major Ontario cities, so 2020 is a great time for investors to get some skin in the game.
Are you ready to purchase an investment property? Call or email to discuss your financing options.
Steven Porter is a Licensed mortgage agent with Mortgage Architects, mortgage broker. For advice and service contact Steven Porter, Investment Property Specialist, Accredited Buyer Representative, Seniors Real Estate Specialist, Certified Luxury Home Mortgage Advisor and Certified Reverse Mortgage Specialist at 905-875-2582, steven@1800Mortgages.ca. www.1800Mortgages.ca