Decades from now when we look back at 2020 and 2021, we’ll still remember that it was a wild ride for renters, specifically in the Toronto rental market. In the months after a pandemic was first declared, we observed rents in smaller units dropping rapidly as people sought more space for the new reality of lockdowns and work-from-home. But is Canada’s real estate market and are Toronto rental rates getting back to pre-pandemic levels or normalcy? This article will break down some of the numbers nationally, provincially and municipally in an effort to predict where Canada’s rental market is headed post-pandemic.
Analyzing Rent From Coast To Coast To Coast
Of all Canadian properties listed for rent at the beginning of September 2021, the average rent nationally was just under $1,800 per month. This number was virtually identical to the average from exactly one year earlier, but up slightly from the month before. The average rent prices in Toronto and across Canada have been steadily growing each month since hitting their lowest point several years back in the spring of 2021.
This chart shows you average 1-bedroom rent in Toronto and average rent in Toronto for a 2-bedroom and how that compares to Canada’s five most expensive cities between January and September of 2021. Overall, the national rent average is trending downwards since the beginning of the pandemic, nearly 10% less than it was two years ago.
The average monthly rent is still down for 1 and 2 bedrooms, however, rental rates are still increasing for 3 and 4 bedroom apartments. In Autumn of 2021, 1 bedroom units have gone down to an average of $1,500 while 2 bedrooms are down to just over $1,800 per month.
It seems like the bigger the unit, the better the performance. The average rent for 3 Bedroom units grew to more than $2,200 and 4 Bedroom apartments saw even greater growth to more than $2,700.
When it comes to house rent in Canada per month, prices appear to have stayed very stable since 2019 despite the pandemic. The cost of rent per square foot in both townhouses and single-family homes came in at just over $1.50.
Breaking Down The Reasons Behind The Trends
It’s a fact that since the pandemic began, more and more renters were looking for more space as they were forced to work from home. But is this monumental shift in work-from-home rates specifically driving rental rate trends across Canada?
When it comes to comparing condo apartments and rental apartment costs, the numbers are very different and give us a good look at the big picture for each type of unit.
For example, the average rent for larger apartment units increased in 2020 quickly and dramatically. Rental rates for units on the smaller side remained relatively the same or went down. 2021 saw this trend change. Larger units barely saw any change while smaller unit prices started rising to catch up with pre-pandemic levels. Empirically, this proves the theory that yes, as more people worked from home, they tended to search for more square footage. However, smaller unit prices are now increasing as the economy regains its footing and post-secondary students return to in-person learning in Canada’s major urban centres.
The picture is much bleaker for condo apartments which saw major drops in rental rates throughout 2020. The trend seems to have continued into 2021, as condo apartment rent is lower on average. And much like apartmental rentals, the smaller units took a harder hit than larger units as people sought more living space during lockdowns and increased commonality of work-from-home situations.
Rental Rates By Province
This chart compares the average price for all rental units in each province from 2020 to 2021.
British Columbia continues its dominance as the most expensive province to live in Canada, beating out Ontario. BC also continues to outpace Ontario in month-to-month growth, which experienced gains of more than 7% and nearly 6% respectively.
A few interesting points to note:
- Manitoba and Nova Scotia both saw big growth levels over 2021
- It’s been observed that many Ontarians have recently moved to Nova Scotia, again fueled by the monumental shift to more work-from-home accommodations by more and more employers.
Rental Rates By Canadian Cities
The table compares average rent in Canada’s top five most expensive cities and looks at the changes that occurred between 2020 and 2021.
Once again, Vancouver remains at the top of the list as Canada’s most expensive city to rent in while experiencing a double-digit growth percentage, it should be noted that Vancouver also experienced a major jump in rent between quarters throughout 2021.
Rent prices in Toronto are the second most expensive in Canada, despite registering a slight decrease, approximately 2% down from last year. It’s interesting to note that of the top five most expensive places to rent in Canada, cities 2 through 5 are all in the Greater Toronto Area.
Analyzing Cost Per Square Foot
Vancouver and Toronto were on the rebound when it came to steady increases in the per-square-foot rental rates, however, there was a decline experienced by both cities by the Fall of 2021.
When it comes to the Toronto condo rental market, the price per square foot dropped about 20 cents or 4%. Vancouver’s drop was nearly identical from a statistical point of view. The generally accepted theory among Canadian real estate experts is that the demand for small units has decreased so much, that there are simply fewer of them being listed on the market and they tend to have a higher cost per square foot, therefore driving up averages for the entire metropolitan area.
To give you an idea of how much Toronto has fallen since the pandemic: In the Fall of 2019, per-square-foot figures in Toronto were nearly 20% higher than Vancouver, but just two years later, Toronto stands nearly 10% below Vancouver. Montreal and Calgary rents escaped the pandemic relatively unscathed, as opposed to Vancouver and Toronto. The per square foot rental rates remained basically the same for Calgary and Montreal, as they both experienced slight increases at 4% and 6% respectively
Comparing Rent In Ontario Cities
This table analyzes data for apartment and condo rentals in multiple Ontario cities between 2020 and 2021. These are some of Ontario’s most affordable cities when compared to Toronto. Prices are reflective of units that are approximately 1,000 square feet.
You can see that the rental rates in smaller cities went up or remained the same while Toronto rental rates dropped. You can also note the dramatic cost difference between Toronto and the other cities throughout southern Ontario. The pandemic and work-from-home realities made it very appealing to move to smaller cities with cheaper rents where a tenant could save hundreds of dollars each month.
Look Towards the Future
Canada’s real estate market is hotter than ever and recovering from the pandemic on a national scale. Rents have been increasing across the country for several months now, a sign of a healthy real estate market nationally.
The demand for apartment rental units with more square footage continues to grow as well with more tenants seeking out 3 and 4 bedroom situations. This trend was observed all year while smaller units are just starting now to increase after falling to a multi-year low in Spring 2021. It’s a different story for condo rentals as these rates have been in steady decline over this past year. Experts also observed a sudden rise in the luxury rental market, which really picked up in the summer of 2021.
This has truly been a two-year period like no other in Canada’s rental market. Working from home became a necessary reality during the pandemic, enticing many Canadians to seek out more livable space as well as home office solutions. Now, in 2021, with vaccines widely available and the COVID-19 caseloads dropping in most Canadian provinces, there is a decline in demand for these extra features of rental units. It’s highly expected that while the pandemic has permanently changed some aspects of society and the economy, the rental market should return to a relative state of “normal” as the general public resumes normal lives as well.
Looking to Elevate Your Condo?
If you’re a condo owner looking to sell your unit or maybe you’re trying to raise the rent and make some extra cash, the professionals at Moose Condo Reno can lend their expertise to elevate your space. Suddenly, you’ll be able to compete in Toronto’s tough rental market. Contact us today for a consultation.