Students hopeful of finding amenable rental market in major Canadian cities this year

Maeve Ellis had given up on finding an apartment with friends while studying at the University of Toronto for the past couple of years.

 

Ms. Ellis, who is about to start her fourth year at U of T, looked for an apartment with companions in the summer of 2022, but they were met with a fraught rental landscape: long lineups at viewings, realtors asking them to offer higher rates and landlords requesting a deposit to even view an apartment.

 

“There were a lot of situations that made it extremely stressful,” said Ms. Ellis, who studies economic history.

 

The experience was so bad that she decided to live with her parents, who luckily reside in Toronto, for the following two years.

 

This year, though, when she restarted the hunt for a shared apartment, she found a distinctly different market. It only took one viewing and application before she locked down a three-bedroom unit with two friends near her school for $2,400 a month – well below current market rates.

 

Ms. Ellis is not alone in facing an easier search for rental housing this year. In some of Canada’s most expensive cities, rental prices have hit a ceiling, and a glut of condo rentals have become available as owners try to limit their losses in a difficult market.

 

 

“What we’re seeing right now is rents in major cities like Toronto and Vancouver are actually declining – Toronto for five months and Vancouver for seven months,” said Giacomo Ladas, a spokesperson with Rentals.ca, who said rents were now at a 22-month low in Toronto.

 

A report by Rentals.ca found that prices for purpose-built rentals and condos in Toronto were down 2.5 per cent month over month in June, with the average one-bedroom unit going for $2,444. The same metric was up 1.1 per cent in Vancouver, but rates remained down 7.8 per cent annually to an average of $2,724 for a one-bedroom unit.

 

However, there are regions of Canada where rental rates continue to climb aggressively. Saskatchewan has seen massive increases in listing prices for rentals with a 22-per-cent hike in June, the third consecutive month where year-over-year rates jumped by more than 20 per cent. Alberta rental rates also saw massive growth earlier in the year.

 

The rates in Toronto are now closer to prepandemic levels, when the average one-bedroom unit was $2,315 in February, 2020. However, rates are still much higher in Vancouver, where the average one-bedroom in February, 2020, was listed at $1,882.

 

A report from Urbanation, which has been analyzing rental and condo data in the Toronto and Hamilton areas since 1981, found that average condo rents declined by 1.2 per cent in the second quarter of 2024. It marks the first decline in that metric since the onset of the pandemic in 2021. In a media release, Shaun Hildebrand, president of Urbanation, attributed the softening to a temporary spike in condo completions, but warned it is not enough to put long-term downward pressure on rents.

 

Toronto rental agent Sundeep Bahl said the people who own these condo units face very high interest rates and a sluggish real estate market for small condos, leaving them desperate to fill the apartments they’re struggling to sell.

 

“At newer buildings, a lot of landlords will accept students because they really want to fill the units,” said Mr. Bahl, who added that some owners are facing mortgage costs and condo fees above $4,000 a month.

 

“Just like it’s a buyer’s market right now, it’s a tenant’s market in the same sense.”

Mr. Ladas added that there are many buyers in major cities that have been waiting for interest rates to drop, and recent consecutive rate drops by the Bank of Canada could finally bring some buyers off the sidelines. As more renters move to purchase homes, it could also free up some rental housing for tenants to take advantage of.

Meanwhile, Mr. Ladas said demand for studio and one-bedroom units has declined as rates rose so much that more people had begun considering roommates. He added that many of those that find one-bedroom units too expensive are considering moving out of larger cities thanks to the availability of hybrid and remote work.

 

The softening in rental prices in Toronto also doesn’t bring them back to prepandemic levels, and Mr. Ladas said vacancy rates remain below 1.5 per cent in Toronto and Vancouver.

 

Renters need to ensure that they have documents such as bank or work statements, void cheques and references ready so they can easily get accepted, he said.

 

Meanwhile, Mr. Bahl said savvy renters, especially those looking for condo units in larger cities, can consider playing hardball and negotiating rent down with desperate owners.

 

“Students need to be made aware that there are a lot more options than they’re led to believe in the market,” Mr. Bahl said.

 

 

 

 

This article was first reported by The Globe and Mail