Toronto tenants are saying goodbye to the era of COVID-19 discounts, with rents fully recovering pandemic losses and reaching record levels, according to new data.
Average monthly rents on newly-leased one-bedroom apartments in Canada’s largest city rose to $2,269 in the second quarter, up 20 per cent from a year earlier, the Toronto Regional Real Estate Board said Thursday.
Rents on two-bedroom homes, at $2,979, were up 15 per cent from year-ago levels. The cost of three-bedroom apartments rose 13 per cent.
The double-digit price gains reflect a decline in the number of leased listings, which are down 11 per cent from a year ago, according to the report.
The pandemic led to a sharp increase last year in apartments listed as people left city centers. Now, as the COVID crisis eases, some of them are returning. Rising interest rates, meanwhile, will price many potential homebuyers out of the market and keep demand elevated for rental units.
“Expect rental market conditions to tighten further in the coming months,” Kevin Crigger, president of the real estate board, said in the statement.
Rents hit four-year lows last year as demand dried up and listings surged. The previous record for one-bedroom rents was $2,262, reached in the third quarter of 2019.
Justin Wu, a realtor in Toronto, said that it’s been challenging to find apartments for even the most qualified tenants, and that some landlords have been closing offers with down-payments of four months to one year worth of rent.
“We had one client that was very qualified, had excellent credit and income but we couldn’t find her anything,” Wu said by telephone. “Everything we tried to put an offer on had nine to ten offers. We had some where the competing offers were offering 12 months of rent up front.”
Homebuilding delays and cancellations -- the result of rising construction costs, higher rates and labor shortages -- are putting further upward pressure on rents.
Out of the 30,000 condo units that were supposed to be built this year, approximately 10,000 have been canceled or paused, according to a note by Benjamin Tal, deputy chief economist at CIBC Capital Markets.