The rental market in Toronto continues to experience the impacts of COVID-19, amid the tail end of the pandemic’s third wave. Market dynamics are, however, showing signs that the rental conditions will improve as the year progresses. But what about the average rent in Toronto?
Well, average rent prices in Toronto for one-bedroom units were down almost 22% year-over-year in the first City quarter of 2021, plummeting to $1,811. Meanwhile, two-bedroom rents dropped 18%, down to $2,403.
Lease transactions on Condominiums in the Toronto area kicked the new year off by reaching a Q1 high of almost 12,000 units – up 70% year-on-year. According to Q1-2021 rental market results published by Urbanation, the number of rental listings for condos fell by 12% compared with the previous year’s quarter, allowing the ratio of quarterly condo listings-to-leases to soar to a pandemic record of 61%.
Signalling that the urban property rental market may be set to make a comeback, Toronto outperformed suburban pockets throughout the Greater Toronto Area (GTA). Regarding lease activity annual growth in Q1, the city sat on top at 78%, with a wide margin compared to the GTA’s growth of 46%.
There was evidence, however, of a bottoming out for first-quarter rents. The average rent per square foot decreased by 1.4% quarter-over-quarter – a significant improvement when compared to the quarterly drop of 7.5% recorded in the fourth quarter of 2020.
Meanwhile, in both February and March, average monthly rents rose month-over-month – each by more than 1%. Toronto Residential Property Management Group, Buttonwood, suggests that the market is on the path to recovery already, having reached its low in January, when average monthly rent prices sat at approximately $2,000.
Condo rent prices in the GTA fell 14% year-over-year in Q1, sitting at an average figure of $2,037, while average condo rents in the City of Toronto declined to $2,033, down 16.2% year-over-year.
This is below the average 905 (suburban areas of the GTA) figure of $2,053, which was down 6.7% year-over-year. Rents remained higher on a per square-foot basis in the City of Toronto ($2.98) when compared to the 905 belt ($2.67).
The report from Rentals.ca also analyzed the percentage of renters throughout the province who have been unable to pay their rent since the pandemic struck. Unsurprisingly, Covid had a significant effect on this figure, with data showing that approximately 4% of Ontario renters weren’t meeting their monthly rental payments. Prior to the onslaught of the pandemic, this figure was closer to 1%.
The data from Urbanation shows projects such as purpose-built, newer rental apartments (those completed since 2005 in the GTA) reporting a Q1-2021 vacancy rate of 6.6%. This was an increase from an already upwardly revised vacancy rate of 5.7% for the fourth quarter of 2020, and from the much lower Q1-2020 rate of 1.1%.
In the City of Toronto, vacancy rates rose from a revised Q4-2020 rate of 7.3% (and 1.1% in Q1-2020), to 8.8% in the first quarter of 2021. Meanwhile, in the 905 regions within the GTA, vacancy rates stayed at a low 1.5%. Recent research reports that there are currently more than 66,000 empty homes in Toronto, ON.
But, despite rent prices declining and vacancies increasing, there has been a growing interest in larger Toronto rental units than in previous years. Viewing rates for four-bedroom properties have increased by 23.6%, while three-bedroom unit viewings have also increased by 13%.
The rental market of Toronto will have no choice but to continue contending with difficult pandemic conditions as it moves out of the third wave – a wave that has kept the GTA in a second-quarter lockdown.
However, the stage is set for a solid recovery. Market dynamics pivotal to its recovery were set in motion during the first quarter and are expected to generate a strengthened rental market climate as the year unfolds – particularly later in the year as more people are vaccinated, office spaces reopen and immigration begins to rise.
Of course, these variables will be subject to change and ultimately dependant upon many factors, not least the pandemic’s continued hold over life as we know it. However, the vaccine roll-out is, so far, indicating that a return to some level of normalcy is on the horizon.
The new report published by Rentals.ca predicts that the rental market prices throughout Canada will likely experience an upturn – which is what is currently happening to house prices in Toronto. They predict that, by the end of 2021, Toronto rental prices may go up by as much as 4%. Experts expect that, although many will stay in suburbia and enjoy the benefits of longer-term remote working flexibility, renters will return to primary markets like Toronto once travel restrictions ease, COVID numbers decline, and students return to campuses.