The pandemic had unexpected influence on the Toronto real estate market. One of the positive results was a slim window of opportunity for Toronto renters to take advantage of decreasing rental rates. As people fled the city due to the pandemic, rental property owners suddenly found themselves fighting over the remaining renters, which forced them to make drastically generous offers on their sky high rents. Although rents are still lower than they were pre-pandemic, levels are starting to rise again. Here I explore the impact the pandemic had on rent and how things played out from a real estate standpoint.
Toronto Rental During the Pandemic
The factors that pushed prices downwards for Toronto rental units included:
- A ban on short-term rentals forced rental property owners to either sell, or switch to a long-term rental model
- Students returned home freeing up more rental units
- Condo owners living in their units decided to flee to less congested areas to avoid day-to-day contact in elevators, etc.
- Remote workers sought larger homes in the suburbs without the worry of the commute
All of these reactions to the pandemic led to two results:
- An overabundance of condos for sale and reduced condo prices
- An overabundance of vacant rentals and reduced rental rates
So the situation proved good for renters and primary property condo buyers, but not so good for rental property owners.
Rental Listings
There were 24,789 units listed for rent in Q2 of this year, representing an increase of almost 15% from last year. Condo leases increased by a startling 58% from the previous peak over the past four quarters. With a rise in students returning to GTA universities and colleges, in hand with a backlog of new immigrants being admitted into the country, more of these listings will find tenants. As well, many who fled to the suburbs are being called back to onsite work, which means they’ll have to face the daily suburban commute. There’s a very good chance this will make city living attractive again as this new reality sets in. As a result, demand will increase, which tends to push real estate prices higher.
Multiple Lease Offers
As demand increases, rental property owners are once again in the driver’s seat. Units are seeing multiple offers from tenants anxious to find a home in the city. Since more people arriving in the city will increase, so too will rents, bringing the GTA rental market back to its competitive, pre-pandemic state.
Toronto Real Estate Prices
So how do all these rental changes impact Toronto real estate prices? There are several expected consequences:
- More people will consider condo ownership if they can’t find a rental unit at a reasonable price, increasing demand
- Many homeowners downsized to cash in on skyrocketing housing prices and swap out for a lower priced condo, putting further demand on condos
- Increased demand for rental units is making apartment buildings and condos desirable assets for investors, which will increase demand for residential units and in turn, push prices upwards
- With pandemic restrictions lifted, people moving back to Toronto from the suburbs will also increase demand, pushing up prices
In other words, supply in the GTA for rental units, condos, and investment rental properties just won’t be able to keep up with demand. Tight markets with low inventory inevitably lead to increased real estate prices.
If you would like help making sense of the complicated GTA real estate market, I’m here to help. Reach out to me today. For more information on how COVID lockdown guides for Real Estate check out this blog.
Photo by chris robert on Unsplash
