In Toronto, a perplexing housing market has begun to surface. On the one hand, there are declining property prices and sales; on the other, rents are rising fast, putting further strain on renter-occupied households. How will Toronto rentals impact the overall housing market?
Toronto Rentals Are Up 25% Year-Over-Year
While this may be tough for many tenants, rising rental rates in my opinion is a positive indicator that the Toronto housing market will rebound nicely. With average rents up 25% year over year, supply has actually fallen. The number of rental units advertised on the TRREB platform fell by 30% in the second quarter compared to the previous year.
However tough, rising rents is a plus for investors. You may even hear of a few cases where properties have even begun to cash flow, belive it or not.
Under Premier Ford’s changes to rent control, those renters who are occupying or plan to occupy a rental unit that was leased for the very first time after November 15, 2018, are exempt from rent control. This means that landlords can increase the rent more than just the ~2% mandate.
How Much Is The Average Rent In Toronto?
This begs the question, how much is average rent in Toronto? The most recent figures on Toronto rentals show that the average rent for a one-bedroom apartment in Toronto is presently $2,257 and $3,259 for average monthly rent for a two-bedroom.
Prospective homebuyers are postponing their purchases as interest rates rise, weakening the supply for rentals. Many households are waiting to see how much lower residential property prices may fall after falling in previous months. I dedicated an entire article this topic and affordability. Give it a read for a better understanding on why waiting won’t improve affordability today.
The Toronto Rental Market Will Continue To Be Hot Through September
Students, both local and international, are returning to in-person classrooms, which means they will have to compete for Toronto rentals as well. This is also true for employees who are obliged to return to the workplace and may want to reside closer to work.
Indeed, with so many individuals returning to the Toronto rental market, there will be heated competition equal to what transpired over the past two years’ home-buying process.
My Predictions For Toronto’s Rental Prices
Will rent prices go down in Toronto? There is no reason to believe that rental market price increases would decrease any time soon. However, it is certainly time to prepare yourself for the new normal which will likely include real estate bidding wars for Toronto rentals in downtown Toronto. What does this signify for the Toronto real estate market? Could Toronto rentals be a lifeline in a falling property market? I believe they are a great sign. Especially as it begins to entice investors to get off the sidelines and to purchase, essentially adding more inventory to the market.
Why Rent is so High in Toronto
The same reasons cooling the national housing market are putting pressure on the country’s already overstressed rental sector, sending rents over the roof in several major cities and challenging the Bank of Canada’s attempts to keep inflation under control.
RELATED READ: What’s Really Going On In The Toronto Housing Market?
But why rent is so high in toronto? Toronto rentals are becoming more expensive for various reasons, the most apparent of which is primary supply and demand. Many individuals want to reside in the city, and landlords are aware of the great demand and that they may charge exorbitant rents.
The larger the city, the more options it has. Toronto’s neighbourhoods are not all created equal. The closer you are to downtown, the more convenient it is to restaurants, entertainment, and other services such as schools, medical office buildings, and shopping. Hence, the demand for downtown Toronto rentals and convenience.
Meanwhile, increasing central bank interest rates have increased mortgage payments and made it more difficult for some homebuyers to qualify for loans. And, as interest rates have risen in tandem with a decline in the housing market, rental costs have risen.
While increasing borrowing rates have put many buyers off, this is a temporary scenario. More buyers will ultimately return to the market as everyone adapts to the reality of increased rates, which are still low compared to historical patterns.
Opportunities Ahead for Investors
What goes up must come down, and Toronto rents are no exception. While a corresponding downward movement is likely unavoidable, the market will need time to correct itself. Meanwhile, landlords still have plenty of opportunities to capitalise on the competitive market, mainly because demand for Toronto rentals shows no signs of diminishing shortly.
TRREB Chief Market Analyst Jason Mercer anticipates that Toronto rents will rise more in the following year, stating that “demand will grow as both immigration and temporary migration into the GTA ramps up over the next year. Both kinds of population growth increase the demand for rental housing. In the absence of a significant increase in rental unit availability, anticipate average rents to rise further in 2022.”
This is the time for investors contemplating a move into Toronto real estate. While the heated market may deter first-time purchasers, it is still a viable alternative for seasoned investors wishing to diversify their portfolio with a high-yielding investment.
RELATED READ: What to Invest In During A Recession
Tips For Toronto Home Buyers & Sellers
Sellers
If you’re considering selling right now, consult with a top Real Estate Agent first. Specific neighbourhoods are still doing very well, with month-over-month price hikes and intense competition. Many, though, are seeing decreases – and many fewer potential purchasers. In light of the present market condition, it’s a mixed bag of assets.
What is of note though, special properties are still selling fast and for top-dollar. Whether that be a stunning home in a sought-after neighbourhood or a cash-flowing investment property, there are plenty of buyers out there looking for that diamond.
Let’s say though that your property isn’t that ‘special’. It’s important that it is perfectly positioned on the market so that it does sell. It’s critical that you have the right team behind you so that the property shows impeccably and everything from styling to strategy and negotiation is just right.
If you want to discuss when the best time for you to sell might be, you can always book a call with me here.
Buyers
If you’re seeking to purchase a home right now, the lack of competition, ~2021 prices and flexibility for conditions are positive things to consider.
Toronto is a collection of micro-markets that all operate in quite distinct ways. Some neighbourhoods are clearly in a buyer’s market right now, while others are still very much in control. It’s important you speak to an experienced Toronto rentals realtor to understand how your budget and strategy fit into each of the micro-markets you are looking at.
Renters
Unfortunately for Toronto tenants, rising interest rates mean rising rents for Toronto rentals. If you’re in a rent-controlled building I’d consider staying for at least another year. If you’re on the hunt, be prepared for bidding wars and to possibly offer more than the landlord’s ask. More downpayment upfront or offering a higher monthly rate could have you winning that bidding war and securing your Toronto rental.
At this point, you may be wondering how do I find a place to rent in Toronto? Ultimately, your best bet at finding a Toronto rental is to work with a seasoned realtor who knows different micro markets and can lead you through most up-to-date Toronto rental listings for you to make a sensible decision.
Frequently Asked Questions
Do you need a realtor to rent in Toronto?
First, I should mention it’s FREE to hire a Toronto rentals realtor as a tenant, they are paid by the landlord. So, while a realtor can be extremely helpful in Toronto’s fast-paced rental market it is not necessary to hire a realtor to find a rental.
There are many great websites that will help you find a rental on your own like Trulia or Padmapper. However, working with an agent in this extremely competitive Toronto rental market might just be the advantage you need to secure your new home.
RELATED READ: The Struggle Isn’t Real For Renters With A Realtor”
Will rent prices go down in 2022 Toronto?
Are rents going down in Toronto? With the current state of the Toronto real estate and Toronto rental market, we do not anticipate that rent prices will go down in Toronto during the remainder of 2022. This is due to the latest interest rate announcement which is increasing many landlord’s costs. More in this article, “Do Falling Toronto Housing Prices Really Improve Affordability Today?
How much is average rent Toronto?
The average rent in Toronto hit $2,463 in Q2 2022. The average rent in Toronto 2022 for a one-bedroom is $2257 and $3,259 for the average monthly rent for a two-bedroom.
Is Toronto rent expensive?
When you compare the cost of Toronto rentals to other Canadian cities, yes it would be considered expensive with the average rent in Toronto 2022 for a one-bedroom at $2257. We discuss why Toronto real estate and Downtown Toronto apartments for rent are expensive in this article, “Why Toronto is so expensive.”
How to search for condos for rent in Toronto, ON?
If you’re on the search for condos for rent in Toronto, ON you are in the right place. Find a rental property and search for Toronto rentals here.
How to search Downtown Toronto apartments for rent?
Search Downtown Toronto condos for rent here or see the most recent rental listings here.
