Get in before it’s too late? That’s the message local real estate agents are sending about the Toronto rental market, to those who are looking to move to a new apartment or find a condominium unit in North America’s fourth-largest city.
The Toronto rental market is back with a vengeance after more than a year of declining rents. For the first time since the Great Recession, it had become a lot more affordable for tenants to rent a one- or two-bedroom apartment in the downtown core and surrounding areas, such as Leaside, Rosedale, and Willowdale. And, according to early forecasts, the best is yet to come for property owners and landlords.
Bidding wars, the reopening of borders, professionals returning to the big city, and tightening inventories…these are the main factors that have contributed to a resurgence in the Toronto rental market.
So, is it time to pack up and move to Toronto before rents become out of control again? Or should you sit tight? Here is what the numbers are saying:
Toronto Rental Market Is Re-Gaining Momentum at a Shocking Pace!
According to the Toronto Regional Real Estate Board (TRREB), the number of condominium apartment rental transactions soared 104.4 per cent in the second quarter of 2021, and the number of rentals advanced 14.7 per cent. Overall, growth in rental transactions surpassed growth in the total figure of units listed on both a quarterly and year-over-year basis.
“Renters continued to benefit from lower average rents compared to last year, which was a contributing factor to increased rental transactions. But, the situation is changing. It is clear that rental market conditions are tightening and will continue to do so as population growth resumes. This will result in declining vacancy rates and an acceleration in rent growth into 2022,” said TRREB Chief Market Analyst Jason Mercer in a statement.
Indeed, prices are still at levels unseen in years, allowing renters to upgrade to a better apartment or even save on monthly costs.
Here is how they performed during the April-to-June period:
- Bachelor: -11.9 per cent to $1,462
- One-Bedroom: -9.4 per cent to $1,887
- Two-Bedroom: -4.8 per cent to $2,583
- Three-bedroom: -1.3 per cent to $3,355
But will rents fall at this pace in the next quarter or even next year? Unlikely, considering the broad array of elements that are beginning to take shape and rejuvenate the Toronto rental market.
Toronto Rental Market on the Rebound in 2021 – and Beyond
Canada and the rest of the world are slowly emerging from the depths of the coronavirus pandemic. With vaccination rates climbing and nations returning to normal, the federal government is set to reopen the border*. In addition, after immigration levels stalled last year because of COVID-19, Ottawa is ambitiously increasing immigration as part of a three-year plan, targeting approximately 1.2 million immigrants:
- 2021: 401,000
- 2022: 411,000
- 2023: 421,000
By the end of 2020, there were a little more than 530,000 foreign students in possession of Canadian study permits. This represented a 17-per-cent decline from the previous year and was the first decrease in international enrolment in Canada in two decades. These figures are anticipated to rebound as travel restrictions are lifted and students can participate in some of the country’s most prestigious institutions.
This is terrific news for the rental market – in Toronto and the rest of the country – since immigrants and international students account for a notable percentage of units. And TRREB President Kevin Crigger agrees, purporting in a statement:
“It is clear that the demand for rental accommodation has substantially increased compared to last year when there was a temporary pandemic-related lull. Strong rental demand will continue into next year, as immigration into the GTA picks up and we see a resurgence in the student population. With rental market conditions already tightening, and demand set to increase, we expect future increases in average rents. This trend further reinforces TRREB’s continued call for government action to increase supply.”
But if the rental market is already facing bidding wars and competition for new and active listings from residents, the Toronto landlords should be gearing up for a terrific performance in the coming months.
CBC News recently reported on Afshin Livar, who was attempting to rent a home in a suburb north of Toronto, telling the media outlet: “I felt extremely devastated and desperate. You could continue bidding and bidding and bidding, and just come back unsuccessful. So that makes it extremely stressful.”
And this is a “byproduct” of red-hot housing prices, notes Dana Senagama, an economist with Canada Mortgage and Housing Corporation (CMHC).
Rent Now Before It’s Too Late?
Should renters take the first apartment that comes their way? The Toronto rental market is poised to experience a substantial boom next year, much like the way it was prior to the coronavirus pandemic. Pent-up demand and a lack of new development could accelerate the rental market’s momentum in Canada’s largest city. If so, budget-conscious renters may say goodbye to the affordability levels enjoyed since the beginning of the COVID-19 public health crisis.