The July 2020 Canadian Rent Report from paddmapper.com reveals that Toronto rent prices continue to see a downward trend. Home prices in June 2020 have hit an all-time-high which means it is officially cheaper to rent than own a home in Toronto at this time. Although rent prices have declined, Toronto is still the most expensive market with rent for a one-bedroom dropping 3.7% to $2,100 last month, while the rent for a two-bedroom dipped 3.6% to $2,700.
As companies move into working remotely, and many social activities are removed, those who rent do not want to pay the big city price tag for amenities that they cannot use. The demand for rentals has shown some rebound heading into the summer months but overall renters are starting to look in more affordable areas, outside of the city, to take advantage of the lower rent prices that can allow them to have an office or a yard since the new “normal” is working from home. The Covid-19 pandemic has affected many renters financially, forcing most people to rely on Canadian Emergency Response Benefit (CERB). In turn, Toronto rent prices have dropped because space and affordability have become very important in terms of housing.
In January, Toronto rentals hit a high-mark of $2,315 and have been dropping gradually for 4 months in a row according to Rentals.ca’ February report. Since then, we have seen the average 1-bedroom rent drop $250 from January 2020 to July 2020. Although prices for listings continue to drop, 65 per cent of Toronto renters have said that landlords are still increasing rent during the pandemic.
Steven Brown, the senior Canada economist at Capital Economics states that “the surge in unemployment among low-income earners, a drop in immigration, and a decreased demand for short-term rentals were among the factors contributing to high vacancy rates, which is driving rental prices lower.” Using Toronto as an example, Brown said an increase of the vacancy rate to 4.5 per cent from 1.5 per cent could cause a 15-per-cent decline in rent prices. CMHC (Canadian Mortgage and Housing Corporation) warns that the economy needs to recover significantly as home prices may fall as much as 18% over the next year.
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