The Weekly 411

TLDR:

📈 Q1 Toronto Market Update

🌇 Our Picks for Canadian REITs to Invest In

🤑 Rent Prices Continue Rising Across Canada

👴 Retirement Homes Are Inviting Student Renters

📈 Q1 Toronto Market Update

• The average selling price in Toronto rose by 1.1% to reach $1,108,720.

• Home sales in the Greater Toronto Area (GTA) reached 5,607 in February 2024, a significant 17.9% increase from the same month in 2023.

• On a seasonally adjusted month-over-month basis, February sales declined after two consecutive monthly increases, while new listings remained flat.

🌇 Our Picks for Canadian REITs to Invest In

Canadian real estate investors who do not want to own property have various options for real estate investment trusts (REITs) in the residential, industrial, and retail sectors. We've rounded up some of the best-performing Canadian REITs you can invest in today.

• Dream Industrial REIT (DIR.UN): Offers a 5.4% dividend yield, emphasizing growth in industrial property funds from operations in North America

• Canadian Apartment Properties REIT (CAR.UN): Specializes in multi-unit residential properties in Canada, with a 2.9% dividend yield and notable operating income growth to $692 million in 2023.

• Northwest Healthcare Properties REIT (NWH.UN): Delivers a 7.5% dividend yield. It focuses on healthcare real estate primarily funded by government tenants.

• Riocan Real Estate Investment Trust (REI.UN): Concentrates on mixed retail and apartment properties in Toronto, attracting high-income tenants, with a reported 7% increase in funds from operations per share in the latest quarter.

Why This Matters: Investing in REITs should be considered for the long term. Industrial real estate is a preferred choice, followed by residential. These asset classes generally rise with inflation and can provide stable returns over time. 

🤑 Rent Prices Continue Rising Across Canada

• Alberta experienced the fastest rent growth, with the average asking rent for apartments rising 20% annually in February.

• Saskatchewan remained the most affordable province, despite a significant rent increase of 15.8% annually.

• Asking rents for purpose-built and condo apartments increased by 12.5% from the previous year. 

• Studio apartments experienced the highest annual growth at 14.8%, followed by one-bedrooms at 13.4%.

• However, in Toronto and Vancouver, the average asking rents declined in February, falling 1.3% and 3.3% respectively.​

Why it Matters: Rising rents across Canada, especially in high-growth provinces like Alberta and Saskatchewan, signify strong and increasing demand for rental properties, making these markets attractive for real estate investors. The variable growth rates in provinces highlight the importance of geographical diversification.

👴 Retirement Homes Are Inviting Student Renters to Alleviate High Vacancy Rates

• Canada's national vacancy rate is at a record low of 1.5%, but retirement homes have a much higher vacancy rate of 15.6%.

• Retirement homes are offering incentives such as three months of free rent and amenities like saltwater pools and pickleball courts to entice seniors.

• Efforts are being made to promote intergenerational living by matching students with seniors in retirement homes

• The Canadian Alliance for Intergenerational Living has initiated a pilot program to place students in retirement homes at reduced rent in exchange for socializing with seniors.​

Why This Matters: Many seniors are opting to stay in their own homes instead of moving to retirement homes due to the high cost of renting. This also limits the supply of housing on the market. 

Investors can adapt to these trends by considering alternative investments in housing that cater to seniors, exploring intergenerational living opportunities, and targeting senior-friendly property upgrades.