Rent Prices Dropping in Toronto
Few rental listings sites or MLS’s were reporting decreasing rents through the early part of the Corona Virus shutdown. But that has changed as we hit the month of May.
Forecasts for rents were for a 20% drop across Canada. Although that predictions looks to be on the high side, rent prices for April are reportedly down in Toronto and Vancouver. Yet with the work shutdown ending and businesses opening again, rents may not drop much further.
Different Situation with Smaller Cities
Outside of Metro Toronto and Greater Vancouver, rents didn’t fall a great deal during April. It could be a trend (work at home, remote work) could be resulting in renters migrating out from the major downtown areas. Is Canada’s apartment rental market undergoing a permanent change? Will rent prices fall in US cities as well in May?
When you consider that many college students and unemployed people may have abandoned their units, you might think some tough times are ahead for Toronto and Vancouver landlords. Yet demand for rental units is very high and often tenants must compete hard to lease an available unit.
Median rents in Canada according to one source, in the 1st quarter 2020 were down $75 from the 4th quarter of 2019. This shows a downward trend was already occurring through the winter. Now the question is whether that down trend would continue through the spring shutdown into the summer.
Housing Shortage Says Everything
But it could be the housing and rental housing shortage is so severe, almost nothing can send rents downward for long. According to Rentals.ca, rent prices during March rose slightly. It’s not until April that prices began to trend downward more strongly.
Now that Canadian businesses are restarting, it might be the end to any further downward trend in rent prices. Of course, landlords must still collect rents at the end of the moratorium. The rent moratorium in the province is indefinite, with calls to extend it further.
The Canadian rental housing situation is similar to US markets. Typically, in the major Canadian cities of Toronto, Montreal and Vancouver, rents are high. A lack of rental units and too much demand were pushing prices upward. In fact, given the lower incomes of Canadians, the actual relative cost of living rivals some cities in California.
But with this recession hitting Canada hard, rent prices in Toronto are beginning to slide. It appears vacancies might be on the rise, thus encouraging some landlords here to consider concessions and rent discounts. As you’ll see in the video below, some landlords are not shy about asking for many months rent in advance and extra due diligence before they rent out an apartment.
Toronto Apartment Rentals
Toronto and Vancouver Rents Falling Fast Lately
Rentals.ca’s most recent rent report shows apartment rents have decreased 7.7% in April within Toronto to $2669 a month, but were down 3.3% year over year. Rent prices were down 1.9% in Montreal month to month, but are still up 26.5% year over year. In Vancouver however, rents fell hard by 15.8% month over month and 15% year over year.
Overall in Canada, rent prices fell 4.6% in April, but are still up 4% year over year. The average rental price is now $1737 per month across Canada.
More Rental Listing Sites Reporting
Apartment rental listing website Padmapper also published its April rent report and found also overall, rents were flat in April.
They found Toronto one-bedroom rent prices fell 2.2% to $2,200 last month, while two-bedrooms fell by 4.1% to $2,830. And in Vancouver, BC, the stats said that one-bedroom rents fell 2.3% to $2,100, while two-bedrooms remained unchanged at $3,000.
Rental Market is Evolving
It’s the remote work increase that might be alarming some downtown Toronto and Vancouver landlords, both residential and commercial.
It’s the same evolution is US cities, as workers fear contracting Covid 19, as the virus continues to plague dense urban areas.
My guess is that rents in Toronto and Vancouver could be back to normal by the 4th quarter, but remote work is on the increase for businesses in major cities. Once immigration is restarted, vacancies in the city of Toronto and city of Vancouver will see occupancy rates jump back up.
However, CMHC forecasts a decline in average house prices of 9 to 18% by next May. That would likely cause a decline in rents, which might make some landlords or investors reconsider purchases.
Good Software Can Help Erase the Losses
2020’s losses will likely cut into the profits of many rental property investors and landlords, but this year was marked for lower rents anyway.
Landlords and property managers might be smart to streamline and modernize their own operations using a modern rental property management platform. It brings everything together to help cut costs and grow revenues. This end result might erase the losses of lost rent during the pandemic.
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