As detached homes in Toronto’s suburbs fly off the shelf at an unprecedented rate, the city’s downtown condo rental market has also seen a huge surge in activity.
But instead of pushing prices higher, the large number of leases signed in 2020’s third quarter was hugely outpaced by the number of condo units that hit the rental market.
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Last week, the Toronto Regional Real Estate Board (TRREB) reported that the average rental price for a downtown two-bedroom condo was $2,913, down 15.3 percent from the same period a year ago, as supply outmatched demand despite the high volume of leases signed.
TRREB’s C01 area, which encompasses the Financial District, CityPlace, Liberty Village and other downtown areas densely populated with condo buildings, also saw one-bedroom rents fall to $2,063, down 14.6 percent from a year ago.
There were 12,795 condo rental listings that hit the market over the third quarter in this condo packed area, up from 4,931 during the same period in 2019. Meantime, there were 4,702 units leased, up from 3,133 a year ago.
“Demand for condo rentals was very strong in the third quarter, with a record number of quarterly transactions reported. However, during the same period, the number of units listed more than doubled compared to last year,” said TRREB President Lisa Patel.
Patel added that units moved off of Airbnb and other short-term rental marketplaces accounted for a significant proportion of the new supply in the long-term rental market. More choice and negotiating power for condo renters led to price declines, not just in downtown neighbourhoods but across most areas tracked by TRREB.
The board’s Chief Market Analyst Jason Mercer said the substantial change in rental market dynamics is expected to reverse once the pandemic’s impact subsides.
“Even if rental transactions remain at or near record levels, it will take some time for the added supply to be absorbed. Once we move into the post-COVID period, population growth from immigration and non-permanent residents will bolster rental demand and absorption,” said Mercer.