The new mortgage stress test, in addition to rapidly escalating housing prices, is keeping an increasing number of people in rental accommodations, and that’s good news for investors.
“A+” tenants—people with high incomes and good credit—used to rent for about a year before purchasing their own homes, which would repel investors, however, they’re becoming long-term renters.
“With the mortgage rules changing, what we used to consider an A+ tenant, who would usually only stay in a rental unit for about a year and then move onto purchasing their own home, are now staying for two to four years on average,” said Crystal Ross, owner of Investors Property Management.
“It’s very good news if you’re an investor. Investors used to back away from A+ tenants because they’d have to find new tenant the following year. I think they’ve given up on the idea of owning a home and decided there’s comfort in being long-term tenant. They’ve accepted the lifestyle.”
Ross noted that the Greater Toronto Area housing market has normalized, but the new mortgage stress tests will remove about 40% of middle-income earners from the purchasing market.
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