Toronto’s downtown rental market refuses to go quietly as a surge of activity rips through the summer heat. As Ontario turns a corner in the COVID-19 pandemic, the average cost of rentals has risen by nearly $150 from the 12-month lows we saw in January. And much of that uptick has occurred in the last 90 days alone.
During the month of June, the average cost to lease a condo downtown was $2,218 — a value not seen since October last year. For investors, this is a sign that the media’s cries of a mass exodus have quieted to a dull roar. And for renters, this more competitive market just means things are headed back to ‘normal’ once again.
Since April, leasing a 1-bedroom downtown has become about $100 more expensive per month. But renting a 3-bedroom has become even pricier with an increase of about $400 in that same time period. Some realtors believe three bedrooms have become a hot commodity for would-be homebuyers priced out of the freehold market. As Strata.ca agent Sam Massoudi describes it, these larger units have become ‘the next best thing’.
But while rental rates are still down from the highs we saw in 2020, the current trajectory shows the market could catch up to those trends by the end of this year.
Osman Omaid is a real estate agent at Strata.ca. He services a lot of rental clients downtown, and says he’s also noticing a shift on the ground.
“The pandemic had pushed a lot of people out of the city and into the suburbs. But now with things opening back up, there’s more demand for downtown rentals. Therefore, we’re seeing low vacancy rates and higher prices,” he explains.
It’s no surprise that rent prices are rising dramatically in some of downtown’s most popular neighbourhoods.
In Regent Park, for example, prices are up almost $300 per month since April. And in the Village and Queen West, the average rent rose by nearly $200 a month. Meanwhile, a lease at CityPlace is up by about $190.
Much of this is fuelled by the overall decline in downtown inventory. And according to Strata.ca agent Francisco Hiebert, landlords are holding off on listing their units until they feel they can charge more.
But further to that, Hiebert believes much of the activity in the months ahead will be driven by renters who had chosen to wait until prices cooled off.
“Tenants who were timing the market are now getting off the sidelines and flooding the rental space. They’ll have to start competing with everyone else though, raising prices even further.”
The average cost of a downtown condo dipped by roughly $10,000 from May to June. In another positive sign for buyers, inventory levels steadily marched upwards, too.
At the same time, Strata.ca data shows buyers are paying not much more than the asking price as indicated by the sale-to-list price ratio, which has been on the decline. In June, people were paying about 2.8% above list — down from April when buyers were paying about 4.4% over asking, signifying a strong seller’s market.
Strata.ca’s Broker of Record, Robert Van Rhijn, says this past June felt more like July in a typical, non-pandemic year.
“We’re seeing inventory numbers climb and fewer offers as buyers have more choice and less competition.”
Van Rhijn believes the market still tilts in favour of sellers. But still, much less so than in March and April, when there was a real chasm between supply and demand.
“The market is a lot more balanced now,” he says.
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