Condo Rental Supply Decreased and Rents Dropped
Condo rental supply in downtown Toronto dropped in September, with completed lease transactions falling almost 33% compared to August, and 14.6% compared to September 2021. The areas surrounding University of Toronto and Toronto Metropolitan University (Formerly known as Ryerson) saw the largest decreases in lease volume as is typical of this time of year. Most students secured their leases over the summer months and these same units are put back on the market in July and August.
The overall decrease in leasing volume is a continuing trend in an environment where the average rent has shot up dramatically since the depths of the pandemic and tenants that are in rent controlled buildings who are currently paying 30-40% under market have no reason to move.
Average rent slightly decreased (-0.38%) from August but sits 16.5% higher than September 2021, and days on market has increased from 8.4 August to 10.9 in September. As rents have climbed over the past 12 month, the least expensive units (Studios, 1 Beds & 1 Bed + Dens) have continued to see the most dramatic increases in average rents with studios leading the way at 22.5% year over year increase.
Landlords – Listing Without An Agent:
With sustained demand for downtown condo rentals we have seen an increase in landlords listing their units without an agent on third party sites like Kijiji, Facebook Marketplace and Zumper looking to save the 1 month’s rent commission charged by real estate agents.
Tenants – To Use and Agent or Not Use an Agent:
We are seeing a large number of tenants who have become frustrated with the competitive leasing market are changing their strategies part way through their rental search. Tenants searching for rentals in the $2,500/month and under are using both an agent to search for condo rentals on MLS and searching on their own using search sites like Kijiji, Facebook Marketplace and Zumper. Tenants searching for rentals $3,000/month and over are seeking the assistance of real estate agents to help them navigate their search. So long as the market remains tight, we expect these trends to continue.
What to expect for the remainder of the year:
We expect tenant demand to decrease in line with normal cyclicality, cooler weather normally brings a chill to the rental market. Expect average rents to slightly decline along with lease volume, and tenants that would have considered leasing a condo this time last year, being pushed into the less expensive, purpose built rental buildings.
Every month Fox Marin produces a Downtown Toronto Condo Rental Report for the benefit of landlords and tenants to help track changing rental market trends. All data included in the report is pulled from the Toronto Real Estate Board’s MLS system.
If you would like to download the full Report please send an email to info@foxmarin.ca or visit our Leasing Page.
