Investing in condos and townhouses near universities offers stable rental income, low vacancy risks, and long-term growth potential.
Investing in condos and townhouses near universities offers stable rental income, low vacancy risks, and long-term growth potential. The start of the school year in Fall 2024 presents a lucrative opportunity for real estate investors to capitalize on the steady influx of students. With a growing number of domestic and international students flooding urban centers for higher education, especially near major universities and colleges, investing in condos and townhouses has become an attractive option for securing stable rental income, experiencing low vacancy rates, and achieving long-term capital appreciation.
The Surge of Students: A Stable Market for Investors
Each Fall, universities experience a wave of incoming students, with numbers projected to grow even further in 2024. In Canada, international student enrollments continued to surge, with over 1 million international students holding a valid Canadian study permit in 2023, an increase of 29% over the previous year. This growth, combined with a strong domestic student population, has created a robust rental market near university hubs, especially as more students return to in-person learning post-pandemic. (Source: ICEF Monitor)
Cities like Toronto, Vaughan, Markham, and Richmond Hill—all within close proximity to York University and other post-secondary institutions in the Greater Toronto Area (GTA)—are particularly well-positioned. Investors seeking high occupancy rates will find demand for condos and townhouses, which offer a lower-cost alternative to renting single-family homes or larger apartments for students.
Condos and Townhouses: A Perfect Fit for Student Living
While student housing traditionally involved dormitories or private rentals, the shift towards condos and townhouses has emerged as a trend for both affordability and convenience. The compact, functional design of condos and townhouses fits well with student needs, offering:
i. Proximity to Campus: Condos and townhouses near universities offer easy access, making them highly desirable for students seeking a short commute.
ii. Affordable Rental Options: For students, condos and townhouses are generally more affordable than larger homes, particularly when shared between roommates, making them attractive to budget-conscious renters.
iii. Amenities: Many newer condo developments come equipped with modern amenities like gyms, study areas, and communal spaces, enhancing their appeal to the student demographic.
In Fall 2024, rental prices for condos in the GTA range between $2,452 and $3,178 per month for one-bedroom and two-bedroom units, depending on size and proximity to universities, while townhouses typically range from $2,750 to $4,200 per month. According to the TRREB’s Q2 2024 report, the increase in condo rental listings led to slightly lower average rents compared to the previous year. The average rent for a one-bedroom condo was $2,452, down from $2,529 in Q2 2023, and the average rent for a two-bedroom condo was $3,178, down from $3,239. Despite these recent rent declines, the strong demand for rental housing and the recent rate cuts make condo and townhouse investments a cost-effective and attractive opportunity for investors seeking consistent returns. (Source: TRREB’s Q2 2024)
Low Vacancy Rates and High Demand in 2024
The vacancy rate in the GTA for rental properties climbed to 2.6% in the first quarter of 2024, roughly 30% higher than the rate a year ago. Despite this, students continue to drive demand, and with limited university housing available, many are forced to look for off-campus rentals. This creates a landlord’s market where rental units near major institutions like York University and the University of Toronto are quickly snapped up. Moreover, with students signing leases for the entire academic year, the likelihood of vacancies during peak seasons remains low. Even during the summer, subletting is common, helping to maintain lower vacancy rates year-round. (Source: Better Dwelling)
Capital Appreciation: A Long-Term Growth Opportunity
The Toronto townhouse market has experienced a resurgence in recent years, with early investors seeing steady returns. This growth is driven not only by general market trends but also by the increasing demand for housing from international students. Toronto remains one of the top destinations for international students, with enrollments increasing by over 15% from 2023 to 2024. As these students often prefer off-campus housing in townhouses and condos, properties near universities are in high demand.
This trend is reflected in the numbers: the number of townhouses listed for rent in Toronto increased by a substantial 38.8% from Q2 2023 to Q2 2024, while the number of townhouses leased rose by 15.6%. This surge in demand is partly due to the growing number of students seeking more spacious living arrangements for shared accommodation, and the need for rental properties close to universities. The average rent for leased townhouses also increased slightly by 0.8% during this period, indicating a stable rental market with continuous demand from both students and long-term renters. (Source: TRREB’s Q2 2024)
The Impact of Interest Rates: Why Now is Still a Good Time to InvestWhile interest rates had been rising over the past year, they have begun to decline with the Bank of Canada cutting its key overnight policy rate to 4.25% in September 2024. This move, as part of the Bank’s third consecutive rate cut, reflects cooling inflation pressures. According to Bank of Canada Governor Tiff Macklem, the decision was influenced by easing inflation, which fell to 2.5% in July 2024, the lowest level since March 2021. Lower interest rates are likely to improve cash flow from rental income, making investments in condos and townhouses more attractive as borrowing costs decrease.
Additionally, the student rental market remains resilient and less affected by broader economic fluctuations, as demand is driven primarily by academic cycles and international student enrollment. This makes investing in properties near universities a stable, recession-proof strategy that can provide consistent returns, regardless of changes in economic conditions. (Source: CBC News)
If you’re looking for a property to lease, whether it’s student housing near top universities or prime rental investments, explore our curated “Listings for Lease.” Discover the latest condos and townhouses available to lease—your ideal property might be just a click away!
