Greater Toronto Rents Tumble in 2020
The Toronto Real Estate Board has released its Rental Market Report summarizing 2020.
The highlights:
Condominium apartments listed for rent more than doubled. The last three months of 2020 saw a 132% rise in listings compared to 2019.
The real estate board said that “demand for condominium apartment rentals reached record highs.” Our interpretation of the data is that the “demand” wasn’t net-new it was people trading their current rental for a cheaper one rather than new renters moving to the city.
The surge in supply is likely the result of a combination of factors:
Short-term rentals converted to long-term rentals because of pandemic related travel restrictions.
Immigration was much lower in 2020 than in prior years.
Many people working from home, chose to move to the Suburbs, Hamilton, London and Kitchener-Waterloo where they could find larger floor plans for the same price.
5,800 new purpose-built rental units were completed in Metro Toronto in 2020.
Growth in the number of available units outstripped the number of renters, however, the GTA is far from a ‘healthy’ 3% vacancy rate.
If vacancy rates rising to 0.9% in the City of Toronto result in double-digit rent declines, one has to wonder what the impact of a balanced rental market with a vacancy rate of 3% to 5%.
The migration to the suburbs is evidenced by higher vacancy rates near the center of the GTA. Currently, renters have more choice and negotiating power.
The average one-bedroom condominium apartment rent was down by 16.5 percent and a two-bedroom rent was down by 14.5 percent.
Rental demand should strengthen toward the second half of 2021. Vaccinations are running behind schedule so immigration, tourism, and foreign students will likely not begin to recover until September 2021 or later.
In the meantime, supply may continue to grow and market conditions will likely continue to favour renters.
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