A popular topic during this pandemic is the real estate market and how it has changed. The Toronto rental market is fairly low compared to the pre-pandemic pricing. There are many factors that may bring the rental price point back up. Some potential changes may be when the border opens up, immigration will start back again, people start travelling, then some long-term leases with a return to being Airbnb rentals, international students will return to the city.
The price drop all began during the pandemic last year. People found themselves without a job, hours were cut back, which makes it very difficult to pay rent. After a long twelve months, many are getting their jobs back, so there is hope for these renters to pay their rent easier.
Many individuals are happy that the Toronto market had a little rental price drop, as the prices have been sky-high in the past decade. Renters were now able to negotiate the price of rent and the landlords had to make a tough decision. Landlords were getting less interest in their rental units, as many were fleeing the city life.
This is not to say there is no hope for the landlords. Rental averages for a one-bedroom unfurnished unit have levelled with what it once was in January 2021. Just like Toronto, another large city like Vancouver felt the same effect in May and June.
Per-Square-Foot Rent in the GTA
For the majority of 2020, the average rent price, per-square-foot has regularly decreased. At the end of the year, in 2020, the average price was $2.76. Now, the price has increased to $2.78 per square foot (blogto.com). So although we saw the charge go down during the pandemic, there is evidence that prices will continuously increase. This could be because vaccines are rolling out, job stability and security are increasing, and people are overall returning to some normality.
The price of the rent depends on if it is furnished or unfurnished. As you would think, furnished apartments collect more rent. In April 2021, the average rent price was 5.1% more for a furnished unit compared to an unfurnished unit. If you break it down into square foot costs, furnished units cost 6.1% higher than an unfurnished unit, on average.
Listings by Bedroom
When looking back on the years, specifically from 2019 and 2020, larger units are becoming less popular in homes as years go on. The torontorentals.com breaks down the unit size, year and popularity.
Over the years, we see smaller units increase and larger units decrease in home builds. In 2019, 42% of housing was made up of one-bedroom homes, 44% in 2020 and 47% in 2021. Studio apartments make up 5% to 9% from 2019 to 2021. This pattern continues with the smaller-sized homes. There is more of a significant change between smaller homes, rather than larger homes. The number of homes with 3 plus bedrooms has decreased. In 2019, three-bedrooms went from 15% to 9% in 2021, 4 bedroom units went from 5 % to 1% in 2021 and in 2019 it went from 1% to 0% in 2021 (torontorentals.com). Within the past two years, the results have dropped significantly in larger homes, studying units with more than 5 bedrooms was not worth it, which is why they are not shown on the graph.
Average Rent Price
The average rent price is down 15% this year for a studio, one-bedroom and two-bedroom unit. The prices range from $1400 for a studio apartment to $2200 for a two-bedroom unit. Now although the larger units (4 bedrooms) are less popular in homes, they had an average price increase in rent of 10% in April 2021 (torontorentals.com). So although there has been a decrease in homes with more bedrooms, there has been an increase in rent charged for the homes that do have more rooms. This is to say, the average rent price for a large unit increased and the rent for smaller units decreased.
A reason for this change could be because many parents are now working from home with their children who are learning virtually. On top of having a comfortable living space inside, many are seeking outdoor spaces.
Rates by Property
Single-family units are the most expensive, with landlords asking about $2608 per month in the month of May 2021. Condominiums go for $2026 and apartments go for $1597 on average. On rentals.ca, the listings consist of 55% apartment units and condo apartments take up 25%. This means that the apartments give us a better prediction of what is happening in the current market. From May 2020 to May 2021, Single-family homes have seen an increase of 1.6% annually, meanwhile in January rent was down its annual price by 15.1%. As a total, the average rent has gone up by 4.2% each month this year. Condo apartment rent has seen a drastic change as it declined by 9.4% over the year (rentals.ca). On a positive note, recently, condo rent has gone up 1.7% each month on average. It is predicted that the rental prices will continue to rise, the more stability we receive. People wanted to leave their smaller spaces as they were more likely to be home and didn’t want to share spaces with others during the pandemic. Now that the vaccines are rolling out, the pattern of rising condo rent should go up.
Overall
Right now, the current price of a studio apartment in Downtown Toronto is $1600 and a one-bedroom on average is $1900. If you need more rooms, a two and three-bedroom unit averages between $2690 to $3127. Properties listed on rentals.ca were $1,708 per month in May 2021, representing a yearly decrease of 5.8%. The average rent price per month in May was $1650 which represents a 5.7% decrease.
There are many reasons for this change in rental prices. Since the lockdown, many people have been forced to stay at home. Rentals are slowly increasing in Toronto and surrounding areas, compared to last year. Many businesses saw the benefit of employees working from home, so experts don’t expect it to change drastically. The smaller units will eventually go back up as we slowly recover. The larger units should not expect such a big change and stay steady.
Many researchers, such as Bullpen Research & Consulting and torontorentals.com predict that the rental rates will rise more, but we will really see a change of prices in 2022 when the students are back in school and borders open. There is so much that can change this year. We now see a light at the end of the tunnel. Between work, life, education, family and friends, we have a lot of hope that will shine through after this difficult time! Shane Madhani is an award-winning realtor specializing in Condos, Single Family Homes, Renos & Financing in Toronto & the GTA.