Rents dropping for apartments and condos in Toronto, experts say

Rental prices in Toronto are dropping, with condos and apartments going for hundreds of dollars less than they were a year ago, according to real estate experts.

Errol Paulicpulle, a real estate agent with Harvey Kalles Real Estate in Toronto, says there is a greater supply of rental properties than there was a year ago and the result is a more favourable market for renters. 

"Well, it's definitely slower," Paulicpulle said in an interview on Monday. 

"The prices have come down anywhere from two to four hundred dollars per unit."

Paulicpulle, who represents dozens of clients with rental income properties in Toronto, says renters are telling landlords that they want to pay less than asking and are making requests for specific improvements when they do make offers.

"The tenants who are moving in are asking for more things like new paint jobs or certain appliances to be changed. Both sides have sensed that there's a change in the market. The tenants have sensed that they have a bit more leverage and most of the landlords have sensed that they need to be a little more flexible."

A December 2024 rent report by Rentals.ca says Toronto has led the way in terms of a national downward trend in rental prices for apartments and condos. It says apartment rents declined 9.4 per cent annually in Toronto for apartment and condo listings to an average of $2,640 in November.

According to the report, the average Toronto rent in November was $1,932 for a bachelor apartment, a drop of seven per cent from the rental price in November 2023, year over year; $2,385 for a one-bedroom, a drop of eight per cent; $3,115 for a two-bedroom, a drop of 10 per cent; and $3,710 for a three-bedroom, a drop of six per cent.

Market may be correcting itself

Giacomo Ladas, associate director of communications for Rentals.ca, said the market may be correcting itself and that correction is being led by renter preferences.

"Asking rents have gone up so exponentially over the past three or four years that rents in Ontario are still 20 to 25 per cent higher than they were when COVID started. The fact that these are going down is a great sign, but they are still so highly inflated that we kind of think that there was nowhere else for them to go but down," Ladas said.

Ladas said a combination of factors is working to bring rents down: developers have put new condos on the rental market that were not selling, there's greater supply of purpose built rentals, less demand from international students with new limits on international study permits; and people are leaving Toronto in search of more affordable places to live.

"It's just coming to a point now where a one-bedroom apartment for someone who wants to live in Toronto is really unfeasible. That's why we've seen on our site specifically shared accommodation listings."

Ladas said shared accommodation listings are skyrocketing and renters themselves are changing.

Conditions expected to last until spring

"When I started in this industry, I expected renters were between 18 and 24. They're moving out of their parents' home, they were in college, they're just kind of starting their lives. But what we're seeing is a real change where renters are families, they have good incomes, they have stable jobs and they don't plan on buying a house anytime soon," he said.

"What does that mean? Well, they're looking for two or three-bedroom apartments, way more than one-bedroom. They're looking for maybe a house to rent, a town home to rent. Now this demand is still going up pretty strongly and one bedroom apartments are really starting to decrease in priority."

As a result, he said landlords are offering incentives to entice renters, such as free internet and one month worth of free rent.

Both Paulicpulle and Ladas said they think the favourable market for renters is temporary in Toronto but will continue at least until the spring.