Rentals Are Hit Hard in the Toronto and GTA Markets
2020 was a year of unprecedented highs and lows across the board. In real estate, we experienced a huge jump in transactions and saw our rental market in Toronto go through an interesting change. A report detailing the Q4 rental market results in 2020 was released by Urbanation, a consulting and reporting firm for the GTA condominium and rental markets. A number of interesting results came from that report particularly in Toronto’s recent purpose-built rental apartment projects.
According to historical CMHC survey data, Toronto has reached a 50-year high for its vacancy rates in its purpose-built rental apartments. These apartments that have been completed since 2005 are reporting a vacancy rate of 5.7% in Q4, a 1.1% increase from the previous year. The total region saw an increase in vacancy rates in comparison to 2019 in Q4. The region outside of the GTA’s vacancy rate reached 2%, a marked increase from 0.8% in 2019. There’s a number of factors that have contributed to this rise, most notably, the population outflow as immigration was staggered in 2020 in addition to many offices and workers moving to remote working. GTA’s overall vacancy rate reached 4.6%, up from 1% in 2019.
In addition to the vacancy rate, average rents declined across the GTA. In purpose-built units in Toronto, the average fell 10% in comparison to 2019. Outside of Toronto, rents fell approximately 2.2%. The entire GTA’s average rent fell 8% compared to 2019 to $2,289. For condo rentals, in particular, rents decline even into our current quarter, though condo rentals broke a record with the amount of lease activity in 2020. GTA saw a 25% increase in the amount of rental lease transactions in 220. 38,366 units were processed and units available for rent increased 46%. Active listings increased 162% by comparison to 2019 with 8,066 units available. The average rent for a condo apartment in the GTA was $2,076 in Q4, a 14.1% decrease in comparison to 2019.
One bedroom rents have fallen nearly 4% in January 2021 by comparison to December 2020 while in comparison to a year-on-year comparison, there is over 20% decrease in one bedroom rents according to Padmapper. The median cost for one-bedroom units in Toronto now stands at $1,830, down 20.4% from January 2020. Two bedroom units fell 16.3% from last year, now standing at $2,740.
It is estimated that the rents for one bedroom apartments will continue to fall in the first half of the year, particularly in the downtown markets in Toronto. However, Toronto Rentals released a report that predicts that the falling rents in Toronto will plateau and then rise in the latter half of 2021 and then substantial growth in 2022.
While there is hope in the future, as it stands, many units are vacant and available for rent in Toronto. Falling prices make many landlords uneasy despite the optimism of the future. The Fridman Team has been working with landlords and tenants to assist them during this time and will continue to find solutions that benefit both parties.