Are rental prices dropping in Toronto? Renters in the GTA have had to deal with rising prices for several years, but are things starting to change? We look at the data to see if rental prices in Toronto are dropping.
Toronto has long been known for its high cost of living, but recent market reports suggest we may finally be seeing a shift in rental prices, especially within the condo market. While it remains one of the most expensive cities in Canada, recent data shows a decrease in condo rents, providing good news and a potential relief for renters. But what’s driving these changes, and will this trend continue?
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What’s Behind the Decline in Condo Rental Prices?
The Toronto Regional Real Estate Board’s (TRREB) Q2 2024 rental market report indicates a significant rise in the number of available rental units in Toronto. The number of condo apartment rental deals reported through TRREB’s MLS increased by 25.2% in Q2 2024 compared to the same period in 2023. Even more notably, the number of condo rental listings surged by 51.3%, which has created more choices for renters and led to a slight decline in rental prices.
With more units available, it appears that renters have been able to negotiate better deals. The average rent for a one-bedroom condo in Toronto dropped by 3.1%, settling at $2,452 in Q2 2024 from Q2 2023. Similarly, the average rent for a two-bedroom condo fell by 1.9% to $3,178,in Q2 2024 from Q2 2023. This drop marks a significant moment for the city’s rental market, which has historically seen steady price increases due to high demand.
One key factor to take note of is Toronto’s growing population, which has kept the rental demand high in recent years. Therefore, despite recent drops in prices, renters should continue to prepare for a rise, as an increasing number of renters could potentially negate the decline in condo rental prices.
The Role of Interest Rates and Housing Supply
Recent interest rate cuts may also be influencing the rental market, albeit indirectly. When interest rates drop, borrowing becomes cheaper, potentially making homeownership more accessible to some buyers. As more people buy homes, there could be an increase in the number of investor-owned rental units, which would boost supply. In theory, a larger supply of available rental units could lead to lower rents.
However, it’s important to note that this relationship isn’t straightforward. While lower mortgage rates could increase the supply of rental units, high rental demand in a growing city like Toronto may still keep rental prices relatively high. Even with more available units, if demand remains strong and outpaces supply, rental prices could stabilize or even rise again in the near future.
Jason Mercer, TRREB’s Chief Market Analyst, echoed this sentiment, cautioning that the current rental relief may only be temporary: “Demand for rental housing will be very strong for the foreseeable future. While the increase in available inventory over the past year has resulted in slightly more affordable rents, it is important to understand that this relief could be short-lived if we don’t see a steady stream of new rental units coming online, both in terms of purpose-built rental and investor-owned condo rental units,”
As he highlighted, without a sustained increase in rental supply, the recent drops in prices may not last.
Will Toronto’s Rental Market Continue to Cool?
While the recent dip in rental prices offers some relief, the long-term outlook for Toronto’s rental market remains uncertain. Population growth, housing supply, and market dynamics will all play a role in determining whether rents continue to decrease or stabilize at current levels.
For now, renters in Toronto can take advantage of the slight decrease in condo rents, but they should remain cautious. Given the high demand for housing in the city and uncertainty surrounding future rental supply, it’s unclear whether this trend will lead to more affordable rental options in the long run. Torontonians should remain hopeful for a decrease in rental prices, but be prepared for potential surges. That means, if you are looking to rent, right now may be the perfect time.
