The average monthly rent in the Greater Toronto Area has declined for the eighth straight month to $2,194 in July and is down 8.7 per cent annually, according to the TorontoRentals.com and Bullpen Research & Consulting’s latest Toronto and GTA rent report.
The average rent for all property types in the former city of Toronto was down almost 11 per cent annually in July.
A number of areas experienced double-digit annual rent drops: East York at 16 per cent, North York at 12 per cent, Oakville and Toronto at 11 per cent and Mississauga at 10 per cent.
Most Toronto neighbourhoods have experienced average monthly rent declines for condominium apartments.
The biggest drop is the Waterfront Communities-The Island, which is a large swath of south central Toronto that encompasses much of the most recently completed new condo supply.
The average asking rent per square foot fell from $3.95 per square foot to $3.58 per square foot from July of last year to July 2020 (-9.4 per cent) .
Downtown Toronto has lost some of its value in the “work from home” era.
“With a large part of the workforce still working from home,” said Matt Danison, CEO of Rentals.ca, “There is a greater need for more space for home offices and a diminished need to be near a downtown office.”
Condominium rental rates are trending downward, and the chart below looks at the average rent and average rent per square foot for Toronto condos by the year the building was completed. Only developments that completed construction over the past 20 years were included.
The average monthly rent was down in 18 of the 20 years. For buildings completed in 2019, the average unit was available for just under $2,500 from January to July 2019, and that has dropped 2.2 per cent annually to $2,444 per month. The rent per square foot is virtually unchanged year over year at $3.88 per square foot.
Having your building completed during a pandemic has not been good for the 2020 buildings, with an average asking rent of $2,183 per month, which is the lowest of any year on the list. The units are small at about 580 square feet, compared to about 635 square feet in 2019.
The $3.78 per-square-foot rent for buildings completed in 2020 is lower than buildings completed from 2016 to 2019.
“There appears to be a disconnect between the ownership and rental markets right now, as short-term thinking related to working from home has shifted demand to secondary locations with larger and less expensive suites,” said Ben Myers, president of Bullpen Research & Consulting. “The continued ownership demand reflects a long-term mindset of buyers who expect Toronto will return to its pre-pandemic desirability when things get back to normal.”
Other takeaways from the August Toronto and GTA Rent Report include:
- Condominium rental rates on average in the GTA are down 10.2 per cent annually or $260 less in July of this year compared to July 1019.
- It doesn’t matter how old the condos are, rent declines appear to be impacting all products available. If the rental market continues to soften, look for more investors to sell their suites, as the July data indicates more strength in the resale market with sales up 7 per cent annually, and prices up 9 per cent annually in the GTA.
- After a three-month COVID-related dip from April to June of this year, the average rent for apartments was higher in July of this year versus the same month last year ($2,065 vs $2,030).
- Apartments were hot in 2019, and the January 2020 annual growth rate was just under 17 per cent. COVID-19 and the lack of demand that ensued resulted in a quick drop in the average rent, which turned negative by April. But average rent has trended up the last two months, and the annual growth rate was about 2 per cent in July.
- It is still too early to tell if the re-opening of the economy will result in increased rental demand, but owners and landlords will have to be more creative in marketing their properties given the increase in competition and vacancies.
The Toronto and GTA rent report takes a deeper dive into analyzing monthly, quarterly and annual rates and trends in the Toronto and the GTA rental markets.
Check out the August Rentals.ca and Bullpen Research & Consulting National Rent Report.