2020 has been a year of difficult circumstances for most of us, and the Toronto rental market is no stranger to challenges as of late. Job market difficulties, COVID-19-induced complications, and economic hardship have shaken up the scene while other housing markets have experienced considerable surges. In good time, we anticipate a recovery, but just what is the current state of the Toronto rental market?
Let’s find out.
With more individuals facing difficult times – and more reluctant to put down the usual amount in rent during economic uncertainty – properties just aren’t moving like they used to. Rental prices have dropped significantly as a result – an average of $520 less per month in Toronto this November compared to November 2019, according to Rentals.ca. People are also relocating outside of the city since many don’t have to commute to work right now, and many are looking for more space to work from home and ride out the pandemic. Therefore, we’re seeing not only more rental units available in Toronto but also an increase in the number of property owners offering incentives to draw in more rental applicants and fill these openings. With the way the current economic and health climate is, we project that this trend of a softening market will continue through the end of 2020 and into the new year.
Rentals.ca’s National Rent Report continues to provide valuable insights into the Toronto rental market in particular. For a one-bedroom unit, prices have decreased by 2.3 percent per month on average, along with a whopping 19 percent in the past year. A similarly surprising story can be told for two-bedroom rental units in Ontario’s capital, declining by 2.6 and 17.2 percent, respectively. Despite this, Toronto’s rent prices remain the highest in any major Canadian city for the time being.
Condo owners have been among the hardest hit, slashing their rates considerably as evidenced by findings on TorontoRentals.com. From January 2019 to August 2020 alone, these properties saw an annual reduction in asking prices by nearly 13 percent. Given the higher cost of condo rents in comparison to regular apartment units, which only dropped by 2.1 percent in the same period, this shouldn’t come as a surprise given the economic stress many Canadians are currently facing.
Several parts of the Greater Toronto Area are seeing more significant reductions in rent prices compared to others. For instance, Mississauga is down by 13 percent annually as of November 2020 as indicated on Rentals.ca, despite climbing by 8 percent one year ago around the same time.
Based on the data we’ve seen and the numbers that continue to roll in through the sources we’ve included in this article, we believe that the softening of the Toronto rental market will continue in the short term, but as COVID-19 vaccine rollouts occur and the economy slowly opens back up, we also anticipate renewed interest in rental properties, especially if prices remain at such low levels.
There are a number of other contributing factors to consider when viewing these trends as well, including the following:
-Reduced showing abilities and complexities in scheduling/availability of bookings.
-Job losses and potentially reduced interest in more populous environments due to the pandemic.
-Tighter-than-ever border restrictions that significantly impact travel and tourism, often a driver of immigration to Toronto and other Canadian cities.
-Shifting towards online learning solutions, meaning students don’t need to rent units close to their college or university of choice.
-Rental rates in Toronto remaining the highest in any Canadian city, potentially keeping even more prospects away.
If you’re unsure what to do amidst this softening of the Toronto rental market, whether you’re looking for an ideal home to rent, an established property owner already, or seeking to make that major first-time investment, our team at Medallion Capital Group is happy to help. We’re fully prepared to assist you in navigating this landscape and finding the best possible value. Contact us today for details!