Market Insight for March 14

Looking for a rental this spring? You might have an easier time than last year, new listing data shows, with the average asking price in Toronto for rented condos or purpose-built apartments now $120-a-month cheaper than it was a year ago.

The downward pressure on asking rents in the last year, observed in Toronto and cities across the country, comes as population growth has slowed and a surge of new apartments have entered the Canadian rental market. The new figures, from listing platform rentals.ca and market research firm urbanation show that rental rates continued to cool in February amid a complete reversal of the high-demand, low-supply of 2022 and 2023.

The year-over-year decrease in February was the steepest since April 2021 during the COVID-19 pandemic, representing a dramatic trend reversal from a year earlier in February 2024 when asking rents increased 10.5% annually according to the report. Despite the recent decline, average asking rents remained 5.2% higher than two years earlier in February 2023 and 16.9% higher than the pre-COVID level five years ago in February 2020.

“Rents in Canada are softening as supply is outweighing demand,” Urbanation President Shaun Hildebrand said in a press release. “Apartment completions are currently running at record highs, while at the same time, population growth has slowed and the economy faces heightened risks due to a potential trade war with the US. Expect rents to continue decreasing in the near-term as these trends likely remain in place.”

In Toronto, the average studio listing in February cost $1,912 a month. Using national affordability standards, that unit would only be affordable to a person or household earning at least $77,000 per year. For the average two-bedroom listing, at $3,081 a month, a household would need to earn at least $124,000.

In Toronto, over the last year, two-bedroom apartment listings have seen the most pronounced drop — down 7% per cent year-over-year to an average cost of $3,081 per month. This is where prospective tenants might find a good deal today, with more property managers and landlords offering incentives for new leases, such as a free month of rent or free wi-fi.

At a national level, asking rents averaged $2,088 last month, marking a 4.8% decrease over February 2024 and the fifth consecutive month of decline. This is also the lowest asking average reported since July 2023.

Softer conditions were most apparent in the condo segment, where the average rent fell 7.6% year over year to $2,192 in February, marking the sixth consecutive month of decline and a 26-month low. Within the condo subset, studio rents came down 10% year over year, followed closely by one-bedrooms (down 8.8%), two-bedrooms (down 7.6%), and three-bedrooms (down 3.5%).

Meanwhile, purpose-built apartments rented for $2,070 (down 1.9% year over year), and within that property type, rates fell 2.3% for one-bedrooms and 2.7% for two bedrooms and rose 1.4% for studios and 3.8% for three-bedrooms.