It’s the best time in almost four years to be looking for a new rental in Toronto, at least in part because of the condo crash.
That’s according to a new National Rent Report from Rentals.ca and Urbanation that found the average asking rent in the city fell 4.5 per cent in January compared to the same time last year, to $2,504 a month.
“I’d say this is the highest amount of choice that we’ve seen in the rental market in a very long time,” said Shaun Hildebrand, president of market research firm Urbanation.
“Outside of COVID, it’s actually been very rare over the last decade or two to see rents come down.”
The report looks at rental listings for spots in homes, townhouses, condos, apartments and even basements. It does not include rents that tenants have already secured, which are typically lower, due to rent control.
Hildebrand said the “sheer volume of supply that’s entered the Toronto market in the last two years” is a big reason why rents have dropped.
Condo completions have been at record highs, and units have gotten smaller, which means lower rents. A lot of investors who bought to sell are now holding on to condos hoping the market will turn around, and in the meantime they’re renting them out.
“They’ll drop their rents quickly, just to get a tenant in the door,” Hildebrand said.
Some condo developers have pivoted to rentals, with more than 6,000 units delivered last year, “the highest in at least a few decades.” This is on top of other factors that tamp down demand like low population growth in the region, limits on international students, and a weaker economy.
Renters are less inclined to commit to an expensive lease when they’re worried for their job, he added.
All of this means that, in a reversal from a few years ago, landlords are now trying to lure renters. A recent Urbanation report, Hildebrand said, found two-thirds of all rental buildings in the Greater Toronto and Hamilton Area are offering incentives and out of those more than half are doing two months free rent.
Giacomo Ladas, associate director of communications for rental marketplace Rentals.ca, said he’s also heard of gift cards and free internet as rental incentives.
Nationally, average rents were down two per cent to $2,057, the 16th month in a row of annual decreases but also still above prepandemic levels.
Toronto still had the second highest average asking rent in the country, second only to Vancouver, at $2,650 a month.
Of course, $2,500 a month is still quite high for many people.
Ladas said larger units like three bedrooms, and affordable ones are still in high demand.
He noted that the average asking rents are still “inflated” from the growth during the pandemic.
“We’re not saying by any means it is affordable. It is just trending a little bit more toward the affordable market,” he added.
