Toronto residential rents dropping because of COVID-19, figures suggest
Demand has decreased and supply is up, driving rents down, Urbanation says
The days of cut-throat competition in Toronto for an affordable rental unit — or any unit, for that matter — are gone, at least for now.
The city's rental market seems to be evening out as a result of various factors stemming from the COVID-19 pandemic, according to real estate research firm Urbanation.
The organization found the number of new leases signed in the second half of June was down 27 per cent year-over-year, compared with a drop of 41 per cent in May. New listings increased by 74 per cent in the first half of the month.
"If you have the ability to move, it's a good time," said Pauline Lierman, director of market research for Urbanation. "You might have some choice out there coming onto the market."
Lierman says the change in the rental market is unprecedented, and the trend could continue into 2021 as more newly built units come online— approximately 20,000 by the end of the year.
The numbers show renters are taking advantage of lower rents and more choice, as the number of leases signed has been rising by a slightly faster pace than that of new listings.
Demand decreases, supply surges
This might be due to several factors related to the pandemic, according to Lierman.
She cites a slowdown in immigration as a factor, both with permanent residents moving to the Toronto area and students coming from abroad, as well as students who have chosen to move home as their classes move online.
"There might [also] be people ... leaving the city," she said.
Madeline Hait, 28, is one of those people, choosing to leave Toronto for the summer, or possibly longer. She is looking to sublet her condo in the downtown core.
That decision started with a trip home to B.C. a few months ago. A one-week visit turned into a two-month stay.
"I was getting a little stir-crazy being in my condo all the time, especially working from home, so I stayed longer," said Hait.
- Average house price in May was down from last year, even as sales bounced back from record April low
The telecommunications professional says the summer visit may turn into a permanent move back home.
"We usually locate ourselves around our jobs, the social activities we do.
"When your job becomes remote and the social activities you usually do are removed ... you reconsider priorities."
Hait says she has heard of others in the city doing the same.
Meanwhile, Urbanation found furnished rental listings grew 62 per cent annually in May, leading some to suspect Airbnb hosts are putting their places on the market for longer term leases.
While that may be true for some sellers, Airbnb says the company's data only showed "minor fluctuations" in the availability of listings, although it declines to share specifics.
In fact, while fewer people were booking stays as a result of COVID-19, the company saw more hosts on its platform than a year ago, according to Alex Dagg, the company's policy director for Canada and the northwest U.S.
Dagg says it could be a result of the pandemic.
"People are struggling, people have lost jobs. Our platform has always been a way to earn supplemental income."
These changes have driven down the average cost of rent, which continues to decline, according to Urbanation. The average condo rent in the first half of June is down 1.3 per cent compared to the second half of May. It's down 5.7 per cent year-over-year, falling to an average of $2,313.
Padmapper — a website that helps renters find apartments — recently released a report for June that puts the rent for the average one-bedroom unit in the Toronto area at $2,180 per month, compared with $2,230 a year ago.
"[The drop] isn't a whole lot considering how much rent has increased in the last five years or so," said Kenn Hale, director of advocacy and legal services for the Advocacy Centre for Tenants Ontario.
He says if rents continued to drop, however, it would be "good news."
He says, generally, rent for lower income earners is still too high. And especially since the pandemic has put many people out of the work, he says governments need to come up with a plan to help them make the transition as the economy opens even more.