Toronto Rental Market Hit by 82% Spike in Apartments for Rent

But a surge in new renters pronto is unlikely.

By Stephen PunwasiBetter Dwelling:

Canadian real estate markets are about to see an explosion in rental inventory if Toronto is a sign. Toronto Regional Real Estate Board (TRREB) data prepared by real estate agent Daniel Foch shows an explosion of new listings for rental units in July. The number of new listings has reached a multi-year high, with a lot of reasons to believe there’s going to be more units hitting the market soon.

Toronto Saw New Units For Rent Rise Over 82% In July.

The City is seeing rental inventory rise very rapidly, something that hasn’t happened in a very long time. There were 8,346 new listings for rentals in July, up 82.1% (!) from the same month last year. The number of new listings for rentals hasn’t been this high since at least 2016, when condo apartment prices began their rapid ascent. Even though the data only goes back to 2016, this trend likely goes back at least a few more years.

Toronto Renters Only Leased 11.5% More Units.

The number of renters signing leases has been rising too, just not nearly as fast as new rental listings. There were 4,415 leases signed in July, up 11.5% from the same month last year. This is also the highest number since 2015, but fails to keep up with the increase in new rental listings. The annual number of leases signed usually peaks in July.

Toronto Just Saw The Worst July For Rental Absorption In Half A Decade.

Fewer or more listings and leases aren’t important as a data point by itself, so you should always look at the ratio. The new lease to leased ratio is just 52.9% in July, which is an improvement compared to the past 3 months. However, the down trend that began in August of last year is still intact. This is the first July going back to at least 2016, where the ratio isn’t higher than 80%.

Toronto Is Likely To See More Rental Supply Soon.

There’s a lot of reasons to see a supply-side expansion, a.k.a. more rental listings hitting the market. Students that have been paying rent and living overseas are unlikely to renew their digs into the school year. Airbnb demand is expected to soften, with the CEO acknowledging demand will never be the same. Then there’s unpaid rent, about 6,000 units officially, that are expected to see evictions soon. Ontario’s new Bill 184 will expedite these evictions, so it won’t be before we see those units also hit the market.

A Surge In New Renters Soon Is Unlikely.

There’s not a lot of reasons to expect demand-side expansion, a.k.a. an explosion of renters to hit the market. Immigration is largely on hold, with fewer international students arriving and staying. The credit impact to thousands of people for non-payment will also limit the amount of competition for units. Landlords probably aren’t going to be keen to rent to people that couldn’t pay their rent just a few months ago. By Stephen PunwasiBetter Dwelling

Large-scale shifts triggered by work-from-home, staggering unemployment crisis, and oil-and-gas bust. Rents respond in real time. Read… Rents Swoon in San Francisco, Other Expensive Cities, TX-OK Oil Patch Y/Y. But 23 Cities with Double-Digit Rent Increases

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  53 comments for “Toronto Rental Market Hit by 82% Spike in Apartments for Rent

  1. 2banana says:

    Yep. Covid just accelerated it.

    But it was gonna happen anyways.

    “However, the down trend that began in August of last year is still intact…”

  2. MonkeyBusiness says:

    AirBnb owners that just can’t hold off any longer.

  3. Gian says:

    With 6,000 unit evictions anticipated, wouldn’t we expect these renters to rent elsewhere in the city and not necessarily add them to the rental supply? Otherwise, Toronto is about to get an influx of homeless people.

    • michael earussi says:

      Once you have an eviction on your record no other apartment or rental agency will rent to you. This effectively makes you homeless (unless you have friends or relatives you can stay with) until it drops off of your record (which in my area takes 5 years).

      All of these evictions will wind up creating a semi-permanent underclass of homeless for years.

      • Anti says:

        Exactly what these evil inhumans plan.. The less renters the more buildings go in bankruptcy, and then the usual suspect swoop in a pick up the properties for cents on the dollar… Same ol same ol..

      • Stephen Webster says:

        The same thing happened to me when my house was condemned and the insurance company delay repairs. I went a head did some repairs that I was unable to pay as I thought the insurance company would pay. It left me homeless for the last 6 years. Many families will be in the same situation now. Many people are going to living on the street. The Ford government is not doing enough for the homeless before coronavoius was here. I camped out at Queen’s Park from January 24 to March 17 of this year and I was told that many people some with kids were in a much worse position than me.

  4. 2banana says:

    Move to a more affordable suburb or city?

    Move in as a roommate?

    Move back home?

  5. Augusto says:

    So many students and working people are vacating rental properties and heading to the suburbs or country to work on line. Then there are all the vacant AirBnB’s. Whether a long term trend, hard to tell, but definitely rents are coming down.

    • Virtually no one is moving to the suburbs as housing in the suburbs is still unaffordable for about 95 percent of the population in Ontario when it comes to the first time buyer.

      • Augusto says:

        I’m seeing a lot of young people moving back to the suburbs to live with their parents, or in some cases taking over the house (while the parents move to the cottage), and giving up the (expensive) downtown apartment/condo. I’m in Calgary, but I’m hearing from friends that the same is true in Ontario.

        • VintageVNvet says:

          IOW aug, back to the way all, repeat all traditional societies have functioned in this kind of thing for eva!!!
          Yes, the older generation has ”done their best” to the next gen, and deserve not only a smaller domicile with smaller upkeep, etc., but also the younger gen needs the room to make more babies, and are also much more energetic to be able to take care of the larger main home…
          Only due to the constant and continuing brain washing of We the Peedons in USA and, although haven’t been there recently, I suspect most of Europe, that has had this very clear and very helpful progression of the generations for eva, been convinced otherwise recently to their dismay and distraction and probably as much destruction as has occurred in USA.
          In spite of the very very bad destruction due to the crony and corrupt situation in USA, I suspect equally bad damage has been done by similar corruption, etc., in all the world!

        • Phillip says:

          I live in a small (30,000 population) city 2.5 hours north of Toronto. A friend’s son just moved out of his Toronto apartment and moved back to live with his parents because he could remotely do the work via computer. We are at least a hour north of the farthest out exurb of the city. Have to face it that while the social life of the city is on hold there is little to attract young people to pay those exorbitant rents just to live there.

  6. Petunia says:

    People have been fleeing Toronto for a couple of years now. Single family homes are totally unaffordable and buyers are moving to the far suburbs to find cheaper housing. Toronto is another NYC.

    • Paulo says:

      Yes, Toronto is expensive crazy but people still move there and upgrade. I have never understood it. Never will. I really don’t believe the population will ever drop. How do they afford it?

      Here is what is happening on Vancouver Island. Booming. Gangbusters.

      In Victoria, south end and a highly sought after landing place, an in law relative just sold his home. Nothing fancy, but well maintained with a suite in basement. Day one listed, it sold 60K over asking, with multiple offers. It went for 1 million 2. Owners moved into an apartment until they retire and will move up Island to some waterfront they own. In my rural redneck area there are no rentals available. None exist. Houses selling like hotcakes. A renovated estate with acreage just had an offer for 1.4 million. Some Victoria dicks who own a ‘BC Box’ a mile from me just did some renos and are now asking 200K+over what they paid for it 2 years ago, about 150K overpriced, imho. In Campbell River, my old home town, new apartments are fully rented before they are finished. We just sold a house there on the second day listed I think. 3rd viewer, anyway. I have no clue where these people are coming from?

      Vancouver is booming with sales. Prices up. It must be the interest rates and optimism.

      In Ontario, and the rest of Canada, the virus is pretty much adapted to by citizens and life goes on. With low interest rates and the economy picking up our worst fears are on the back burner. The only real downturn is in hospitality and foreign tourism. Everything else is doing well. On the highways every second vehicle is an RV or a truck pulling a boat. In fact, tomorrow I’m going fishing and on the way I am dropping off some tools at a jobsite for my son’s business partner. (It’s on the way to the boat launch). Son is busy working in the Oilsands, making his fortune and working pretty much 7 days per week. It’s going well here, actually. People with skills are employed.

      • Petunia says:

        Don’t forget Canada is still selling residency visas and passports. We do it too in America. For as low as $500K you can buy your way in in both countries.

      • The Canadian economy is not picking up its in a steep decline which will only get much, much worse after the U.S. election this November.

    • Rand Passmore says:

      SOME people are
      fleeing .The greater Toronto area including the central areas have continued to see huge population increases in the previous 50 years. This long term trend is likely to continue and accelerate. The downward short term trend will not continue beyond a couple years or so. People are simply going down the highway further into the suburbs. The GTA is going to hugely expand area wide.

    • Anti says:

      Yes Toronto has become a soul less mass of glass tower blocks, no personality or humanity at all..and they think we will all live in SMART Cities being radiated and spied on 24/7,
      Their fake Hoax of a health emergency has put a stop to that for a few years if ever..

  7. Seneca’s Cliff says:

    Coming to a town near you.

  8. The Bob who cried Wolf says:

    Each city seems to be experiencing different results, sometimes wildly. I figure that when the eviction moratoriums end there will be a ton of folks being told they need to leave. I also figure that someone (Uncle Sam) will come in and throw a bunch more money at the problem so a lot will actually stay. It’s not too far of a stretch that they would force landlords to not report evictions if they’re “covid” related. I quote covid because so much of the blame for everything in the coming months and years will be “covid”. Poorly run pensions, bankrupt cities/states, etc. You know it’s coming.
    Back to different issues per city…I’ve been sounding the alarm since May about what’s happening in San Diego. Charts and graphs may say things are slowing here but I, and many others on this site, will say the same thing. Things are hot in San Diego. Rents in some situations have gone up. House prices have gone up astronomical amounts and even condos have risen a little. I have no doubt, though, that anything cramped close to neighbors will suffer some, even here. Stats here show rents have dropped very little, but my experience has been that we’ve been able to rent things, and for more than before (not a lot, but more)
    There are growing stories of tenants not being able to find things and I suspect that’s because any landlord/manager worth his salt is being very careful who he rents to nowadays. Who wants someone to move in and immediately not pay rent for 6 months to a year?

    • Seneca’s Cliff says:

      The towns that are still doing well based on employment in the university and medical industry complexes, are like Wiley Coyote spinning their legs in the air above the canyon, but the grim reaper is coming for them this fall. This fall Covid reality will hit these sectors too and places like San Diego and Boston will look feel like Allentown PA in 1992.

    • Mr Wake Up says:

      I suspect that’s because any landlord/manager worth his salt is being very careful who he rents to nowadays:

      We have a strong tenant seeking to sign a long term lease outer boroughs of NYC. I went to visit his factory and warehouse in NJ on the other side of the hudson just to be “extra sure” all is well in the moment. There is due diligence on paper but to visit a physical operation can pretty much provide clarity. If you know what your doing lol

      I’ve become so fascinated with the visual changes here in NYC I started documenting.

      When I crossed the river and entered the industrial park I was totally thrown off to see the amount of vacant warehouse spaces along with for lease/ sale signs. I asked the potential tenant he tossed it up to above market rates. Still this is where we have lost NYC Industrial tenants, I guess no need to service a 88% less foot traffic Manhattan… eitherway not a good sign.

      Double whammy today with this article really surprised about Torononto.

      Next your going to tell me Quebec dropping french for Arabic…

      • Petunia says:

        I don’t know how true this is or where in Canada this town is, but I have heard more than once, there’s a town called Richmond(I’m assuming the spelling) which is almost entirely Chinese, including the town govt.

        • td says:

          That Richmond is in British Columbia, just south of Vancouver.

          There is a countervailing trend for both the Toronto and Vancouver areas: about 300,000 Canadian citizens live in Hong Kong. There is a steady stream of them returning because of the deteriorating security situation in HK.

          My son had to switch apartments in downtown Toronto because the owners were returning. Generally, owners can break a lease if they intend to live in the property. It just meant that he moved to another unit on the same floor.

          The returnees will not be numerous enough to override the overall movement but it is a factor. Also, many of them are looking at the suburbs as well and I assume they will attempt to trade or they already own property in the outer darkness. There are both Mandarin and Cantonese areas to choose from and it is possible to live in both metropolitan areas in your own flavour of Chinese.

          Overall, I expect a downward trend in prices but nice parts of exurbia like Victoria will have their own little boomlets. The rest of Canada is not as exciting as Toronto, Vancouver and Ottawa and there is much to choose from for those working remotely.

        • Anti says:

          LOL, Vancouver is much the same, they own all the big blocks and houses..

        • backwardsevolution says:

          td – the owners broke your son’s lease in order to move in, then sell the unit.

          Most of these condo units in new high rises were bought by people in Hong Kong and China as investment properties. This is what pushed prices up. They bought because they wanted to capture the price appreciation, not because they wanted to have a place to escape to. IOW, it was a good investment at the time.

          Ask your son to watch for his particular unit being put up for sale. My guess is they wanted your son gone so that they could paint it, then sell it.

          When Canadians asked who were buying all of these units, the response was always that “Canadians are buying these units.” Yeah, people with dual passports living in Asia who bought purely on speculation!

    • Rand Passmore says:

      Strange things will happen as the vacancy rate goes up. Desperate Landlords will rent to anyone and hope for the best

  9. It's over says:

    In Vancouver (lower mainland) there are more high-rise and low rise construction projects mid stream then I have ever seen in my life.

    How people can afford a 5-600k 1 bdrm apt that outside the city or think it’s a good investment is beyond me. Real estate bubble + covid19 impact = a world of pain .. I really hope I’m wrong.

  10. rural living says:

    Some of the more rural areas with colleges in northern California are posting a lot more rentals. In other areas it’s hard to tell because there are several places landlords post- not all areas use craig’s list, some only use local list serves.

    There’s also some houses for sale that look like investors are clearing out some of their nonperforming inventory. Trashed rentals and vandalized empty houses. Sledge hammer holes in walls and fireplaces, furnaces torn out. Rumor has it that one couple was breaking into $1m summer homes and living in them serially for extended periods of time. I guess people know their names (very small towns) but the police won’t do anything.

    I know this because I’ve been trying to buy a fixer for a year, talk to everybody, and look at every Zillow post for 150 miles.

    I’m going to wait a while. I think some of the investors that are swarming who don’t know the area are going to make mistakes.

  11. Rand Passmore says:

    Is this just the first stage of a real estate price collapse? Maybe it’s time to sell NOW!

  12. Greg says:

    Since evictions will start at the end of August how many of these rentals are for post eviction occupancy starting in Sept? Perhaps 6K plus!

  13. lewis says:

    Miller Samuel (excellent RE data gatherer and appraiser) just reported on Manhattan residential rental for July 2020. It is very detailed and comprehensive. To summarize; the rental market plunged by ~ 10% Y/Y in July the most in many years. Bloomberg has the full article, (just search Manhattan real estate to view.) What was most interesting to me was the huge listing increase Y/Y 13,117/5912, an increase of ~122%. From all the new building that is still going on huge supply will hit this market for at least 2 years that will have to be either sold or rented. Many demolished still have not been started which will add more supply. Prices were sky high and now falling to buyers offers as my broker friend tell me. The natural supply/demand conditions were already in place when Covid hit. A perfect storm if there ever was one. Is Toronto in the same boat?

    • Petunia says:

      Saw a video interview of a NYC buyer’s agent discussing how much cash you need to buy the average priced NYC one bedroom coop/condo. For the average priced $1M condo you need $377K in cash. Breakdown was $200K down payment, the rest is taxes, and HOA fees and required reserves.

  14. Joe Lalonde says:

    When you have the Toronto Mayor yelling that taxes will raise 60%, people tend to listen and want to bail out in droves.

    • Joe Lalonde says:

      This Toronto Mayor is again part of the bloated government agencies problem of keeping all these pet social programs and threatening to cut back basic essential services while adding more bi-laws and restrictions on top of the heavily regulations on businesses. Should any business break any of these new laws and bi-laws, they are heavily fined.

  15. Just Some Random Guy says:

    Between about 2005 and 2015 Toronto went on a condo building spree like never seen before in the history of mankind. You can’t see the lake anymore since it is all condos.

  16. Since the Chinese are the only ones who can (afford/buy new) the new condos they buy will just sit empty anyways.

    • backwardsevolution says:

      The Chinese only bought because they wanted to capture price appreciation. They were buying 10 to 20 units at a time, which pushed prices up, up and up.

      If prices start going down, they will not buy. Why would they? So they can lose?

      If prices continue their downward spiral, there are going to be huge amounts of units for sale on the market.

      The Chinese (Hong Kong and Mainland) caused prices to rise, and now they are going to eat their losses.

  17. td says:

    Just to underline the flight to suburbia: I live in Durham Region east of Toronto which has about 740,000 people. There is currently one active case of Covid-19 in the region.

    I live in a condo apartment near the GO train and it has been pretty middle of the road over the last couple of years with one bedrooms going for about $C400,000 and two bedrooms for $525,000 to $600,000 depending on the view and interior decoration.

    From April to mid-July, any units that came on the market languished for up to a couple of months and there were price cuts on the listing. In the last few weeks, new listings sell in less than a week and go for the asking price. I think the downtown Toronto people are on the move.

  18. Joe Lalonde says:

    A restaurant in Toronto reopened.
    On August 4 an employee was tested and 7 days later it was positive.
    Last night the health officials swooped in and checked the new bi-laws and found the owner failed in 3 different areas and now face closures and 3 hefty fines for failing customers adhered to the new bi-laws.
    Welcome to the new normal.
    Does this encourage in any way to open a business in Toronto?

    • MiTurn says:

      SEVEN days! It took seven days to get a result? That seems lengthy. I assume the employee tested wasn’t still working while awaiting the results.

  19. AvgJoe says:

    Im one of those new tower dwellers at Toronto downtown core leveraging roommate share arrangement to supplement expenses.

    Summer last year responses to room posting would see at least 5 inquiries a day with plenty to pick from and a quick occupancy easily attained. Most looking to dodge lengthy office commute & costs.

    This year with a lowered price interest dropped to 7 inquiries a month at best – and this is a large premium option far from “cozy” type. Yet so far selection is mostly unsuitable or sketchy, and none driven by a new job.

    August 2018 went to check out pricing at Spadina Bremner site while sales office was still up. 750-ish sq ft unit around $900K, parking 64K – was advised by salesman that most units were sold out.

    Did a quick cost calculation on maintenance and taxes(from city site) to come up with $1200 monthly total – that’s the dwelling cost before any mortgage payment. … “Investment” anyone? Today since excavation is well under way 70% must have been sold to secure construction financing, yet plastered posters still suggest availability.

    Granted, better part of the hood went for 1/2 – 2/3 or so of those prices so maybe that end of the spectrum may be largely payed up thus relatively safe or immune to default. But in light of reality of the past few months to anyone with a calculator looking for investment opportunity this market appears to have exhausted it’s potential.

    Between gov CERB ending soon, banks announcing one no office returns into 2021 and a lot of employment not coming back soon enough, where it is at is relative, but if that keeps up it appears that the sh*t is mid-flight between many a face and the fan.

    So thats downtown Toronto for ya. Meantime apparent frenzy is playing out in detached & semi-detached R.E. market to the horror of CMHC and everyone else who’s watching this train distancing into yet higher orbit while watching their wages (for those who have any left) shrink relative to new heights .

  20. PIGL says:

    Mr Wolf; you seem like a very learned, sensible man, I find many of your postings very interesting and informative; In fact yours is one of my go to blogs.

    I can’t help but notice, though, that very many of your regular commenters
    are embittered cranks. Why do you suppose that is? Does it not concern you? You deserve a better readership.

    • Nicko2 says:

      Haha! So true! But on the other hand, Wolf does curate comments, so one can imagine what this place would like with zero moderation. Yowza.

      Still, the insightful stuff still outweighs the crazies.

    • Wolf Richter says:

      PIGL,

      “You deserve a better readership.”

      That’s nonsense on several levels. There are 46 comments here at this moment. The article was “read” so far by just over 10,000 “readers.” Comments don’t reflect anything other than comments. Commenters are like authors, and quite often they don’t even read the article. It’s an additional part of the site, and many readers come just to read the comments, and have told me so, GRRR, because the comment section with its dynamic back-and-forth is often fun and informative.

    • The Original Colorado Kid says:

      Some of those cranks have some interesting comments, in spite of being embittered, and some are just plain out there. But you do realize that by saying Wolf deserves better, you’ve put yourself on a bit of a judgmental pedestal.

    • Greg says:

      Wolf does it concern you that some of your commenters, like PIGL, are embittered about other comments opinions. Wolf you deserve better commenters on comments!
      Too funny!

      • Wolf Richter says:

        I try to take it all in stride. I’m love our commenters.

        Criticism of what I do is OK, and I take it to heart, to make sure my site and I don’t go off the rails, but in this case, everything is on track just fine.

  21. JC says:

    BLM?!?, yeah everybody hates victims of racism speaking out, how dare they.

  22. Torontonian says:

    Toronto is the best city in Canada and probably has the brightest future of any city in North America. The pandemic has hit all cities hard but Toronto will recover quickly. No other city had the immigration, diverse employment options, finance, medical/research, universities, entertainment/sports, govt, etc. There is a veritable brain trust in this city and the its not going anywhere.

    While it’s true that the WFH trend is real and will take a big bite out of office demand and permit many workers to relocate, all the action is in Toronto and all the renters will return once the health crisis subsidies and the immigration channels are reopened.

    -Watch a lot of the condo rental product end up in the hands of end users

    -Watch for govt subsidies for rents for the pandemic continues

    -Watch for a tough rental market until around Spring 2021 when things start to really recover

  23. Dave Blake says:

    Aspects of the Toronto rental market are being reflected in other cities e.g. Melbourne, Australia, around the world, where accommodation demand has been driven by the ‘export’ education sector, imported low cost unskilled and semi skilled labour, and Chinese ‘real estate banking’.
    What is being observed is the magnitude of these drivers as they are reversed or constrained, separate to underlying domestic demand.
    What may be a new thematic or a global, long term secular trend if you like, is a permanent exodus of residents from cities to smaller towns, if the benefits of city living no longer stack up.

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