Photo: James Bombales
In what would ordinarily be a competitive time of year to secure a new lease, data released today by the Toronto Regional Real Estate Board (TRREB) show decreases in both yearly transactions and prices for condo apartment rentals in the Greater Toronto Area.
In May 2020, the average rent for a one-bedroom condo apartment was reported to be $2,086, a 5.1 percent drop from $2,197 in May 2019. Two-bedroom apartments experienced a slightly greater decline, falling by 5.6 percent from $2,904 in May 2019 to $2,740 in May 2020.
Last month, TRREB reported the average rent for a one-bedroom condo apartment in April 2020 to be $2,107, and $2,705 for a two-bedroom unit. This highlights a gradual decline in pricing for one-bedroom apartments month-to-month, but a slight monthly price rise for two-bedroom units from April to May.
Activity within the rental market has seen a significant slowdown compared to the year prior, though, month to month leasing activity showed a strong improvement. There were fewer condominium apartment rental transactions last month than in May 2019. One-bedroom condo apartment rentals shrunk by 30.8 percent year-over-year, from 1,863 to 1,290 while transactions for two-bedroom units declined by 26.7 percent to 820, down from 1,118 in May 2019.
However, despite annual decreases, monthly apartment rental transactions showed signs of improvement from April to May. One-bedroom condo rental transactions jumped from 754 to 1,290. In the same time period, transactions for two-bedroom units nearly doubled, growing from 489 in April to 820 in May.
Prior to the pandemic, Toronto was the country’s most in-demand and expensive city to rent in, with a vacancy rate hovering around 1 percent. This week, in a company blog post, brokerage RE/MAX Canada noted that some Toronto landlords have found themselves over-leveraged and vulnerable amid COVID-19, particularly those in the short-term rental business. Stay-at-home measures have quickly tanked demand for Airbnb-style rentals, a once enticing opportunity for big profit margins over standard leases.
Now, as a result of non-essential workplace closures, many tenants are also struggling to make rental payments, which the brokerage says will dampen demand in the market for a prolonged period.
“This extra supply flooding the rental markets, coupled with depressed demand levels, means there is potential for average rental rates to decline within the Greater Toronto Area,” said RE/MAX Canada in the blog post. “This anticipated drop in rent prices and competition may translate to a less stressful home search for new renters, post-crisis.”
However, the brokerage warned that price relief on rentals isn’t necessarily guaranteed. Some prospective buyers may opt for a rental apartment in lieu of purchasing a home, citing reluctance to wade back into the housing market.
“This may help to balance out any loss in rental demand, preventing any significant drops in average rental price,” said RE/MAX Canada.
