Ben Myers says there’s no precedent for what’s happening.
“In my 20 years covering the market, I have never seen rent declines like this,” said Myers, reflecting on the persistent drop in Toronto apartment and condominium rental rates since the coronavirus pandemic was declared in March.
Myers, president of Bullpen Research and Consulting, tracks the GTA real estate industry. In his new report analyzing the Toronto-area rental market, he pointed out how far the market has dipped.
“The average rental rate in the GTA is now down 13 per cent annually, but when controlling for bedroom types, one-bedroom suites are down 11 per cent and two-bedroom units are down nine per cent,” he wrote.
The average rent was approximately $2,131 per month in September, Myers reported.
The drop in prices came as no surprise to those looking for a place to live. Rental websites are bursting with new ads seeking tenants, a far cry from just a few months ago when landlords could name a price and usually get it.
“It certainly is reaching an historic downturn, something we’ve never seen before,” said Richard Joy, executive director of the Urban Land Institute.
“For renters, it’s a buyer’s market, and rental affordability has been a serious issue for some time.”
Where are potential renters finding the deepest discounts?
“The condo market in the downtown core: the Church-Yonge corridor, the Bay Street corridor, the entertainment district,” said Myers, who told Global News that monthly rents are typically down between $300 and $500.
He said the reduction represents savings of 15 to 20 per cent over the same time in 2019.
Myers attributed the glut of units on the rental market to various factors, including the “work-from-home phenomenon.” Many renters have moved back with their parents because they may not need to be in an office daily anymore. Also, foreign students and tourists are not booking short- and medium-term rentals as they normally would.
He also wrote that many landlords, “especially owners of recently completed high-end apartments,” are offering significant discounts to lease their properties, including up to two months of free rent.
How long will the rental market persist like this?
“Most people are anticipating a healthy return when the pandemic is truly lifted,” said Joy.
“It’s hard to imagine it would go lower but anything’s possible.”
Myers wrote that “weakness is expected to continue” in the market.
“Rents will eventually go to a level that start to attract people out of their home and out of roommates’ situations,” he said.
But asked for his view on prices in the months ahead, Myers offered this prediction.
“We think it’s going to continue to go down,” he said.