We have seen some crazy things happen over these past couple of years in our real estate market and one that no one anticipated was the hike in rent, especially in the city of Toronto. I recall a time in the summer, I had a client moving from Montreal to Toronto and she was desperate to find a place to live. I called every available rental listing I came across and they were all rented out basically the minute they hit the market. People were placing offers site unseen and paying over asking. Agents were holding offer nights for rentals! If you are wondering, she found a place and ended up paying $300 over asking, site unseen. I knew at that moment, we were heading into what felt like a rental crisis.
The question is, is there any sight of the Toronto rental market declining as we approach the end of October? I’m Britt Huggins, Toronto real estate agent, and today I am here to talk about what is going on with rental market in the 6ix!
Toronto Rents Continue to Rise as Prices in Surrounding Areas Decline
According to Zumper’s latest Canadian rent report, prices to rent a one-bedroom apartment rose 5.6% from September to October and a 16.1% jump year-over-year.
Toronto rents have been on the rise for some time now, and there is no sign of them slowing down anytime soon. The average rent for a one-bedroom apartment in the city has reached $2,090 (not to be confused with condos, houses, townhouses and other types of rental properties which can go for considerably more).
This trend is not just limited to Toronto, either. Rents are also rising in many other major Canadian cities, including Vancouver, Montreal, and Ottawa. The only city where rents are declining is Calgary, which has been hit hard by the recent oil price crash.
So why are Toronto rents continuing to rise while prices in other parts of the country are falling? There are a few possible explanations.
1. The Population in the GTA is Increasing
The Greater Toronto Area (GTA) population has been growing steadily for years and is projected to continue. This increase in population is one of the main drivers of rising rents, as more people need places to live.
2. People Are Moving Closer to the City Centre
Many people have chosen to move closer to the city centre, where they can take advantage of the many job opportunities and amenities that Toronto offers. Also, after two years of the world shutting down and people moving out of the city to work from home, they are being called back to the office and the city is a much more convenient, realistic location to live. This increased demand for rental properties in downtown Toronto has increased rents even further.
3. The Cost of Ownership is Rising
The cost of owning a home in the Toronto area has been rising steadily for years, making it increasingly difficult for people to buy their own homes. Even with the slow down in prices, the interest rate hikes have spooked buyers and this has led many people choosing to rent instead, which has put even more upward pressure on rents.
4. There is a Lack of Supply
The number of rental properties in the Toronto area has not been keeping up with the increasing demand, leading to a shortage of available units, making it difficult for people to find affordable living places, which has increased rents even further.
5. The City is Attractive to Investors
The Toronto real estate market, has been attracting a lot of investment from domestic and foreign investors in recent years, leading to increased demand for rental properties as investors are looking to rent their properties to tenants.
6. Gentrification
The gentrification of neighbourhoods in the Toronto rental market has led to an increase in demand for rental properties, as people are looking for places to live that are close to the many new restaurants, cafes, and shops that are popping up.
7. Housing Market
The strength of the housing market in Toronto real estate has led to increased demand for rental properties from people trying to avoid the high costs of buying a home in the city. In most cases, the rising cost of rent is a direct result of the increasing demand for rental properties.
8. Student Population
Toronto is home to a large number of post-secondary institutions, and this has led to an increase in demand for rental properties from students looking for places to live while they study.
9. Immigrant Population
Toronto is one of the most popular destinations for immigrants to Canada. In 2022 alone, it was estimated that 400,000-500,000 immigrants would call Canada home. This has increased demand for rental properties and put a ton of pressure on the rental market, especially after buyers decided to pass on purchasing and say yes to renting this the decline in sales started in April, 2022.
All of these factors have contributed to the rising cost of rent in Toronto, and there is no sign that the trend will stop anytime soon. There is an expected rent hike on October 26th and one more in December. If you’re looking for an affordable place to live in the city, you may consider moving to one of the surrounding suburbs. Prices may be lower there, but it’s worth considering how long your commute will be and whether you’ll have access to the same amenities you’re used to in the city.
If you have any questions about real estate and would like to speak to one of our specialists, please do not hesitate to call or fill out a form on our website!
