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Video #1- Housing Market on fire despite Global Pandemic

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Video #1- Housing Market on fire despite Global Pandemic

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Even though the world is going through a scary Pandemic, it isn't stopping Torontonians from buying homes. The average price of a home as of February 2021 in Toronto has shot up to just over 1 Million Dollars which is a 14% increase compared to February 2020, which houses were costing around $910,000.
The Work from Home order also has a big impact on the housing market. Were all a little unaware of what the other side of the pandemic will do to the housing market and the Work from Home orders.

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Toronto's housing market on fire despite pandemic

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Jason Mercer, chief market analyst at the Toronto Regional Real Estate Board, joins BNN Bloomberg to discuss the latest housing data from Canada's largest city.

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Website #1- Toronto and GTA Rental Market

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Website #1- Toronto and GTA Rental Market

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Last spring, the Coronavirus changed the life for Toronto rentals. Because of this, tenants are now negotiating power and asking for more options, which was unheard of before the pandemic. At this moment, it's better for someone to rent out a condo downtown then it is to buy a home.

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For years, it's been a tough battle for renters living in Toronto and the surrounding municipalities. Rents have only been on an upward trajectory as supply was limited and demand was through the roof. But after a year of the COVID-19 public health crisis, Toronto and GTA rental real estate is now a renter's market.

The turning point was last spring, when the coronavirus pandemic crippled the nation and forced governments to institute a plethora of new rules and regulations. One of the first items on the chopping block? The short-term rental market, affecting condo investors who relied on Airbnb and other short-term rental arrangements. The other factor was immigration restrictions, which have led to seismic drops in the rental market.

After a year of the COVID-19 public health crisis, Toronto and GTA rental real estate looks very different. Tenants have negotiating power and more options, which was unheard of before the housing boom in North America's fourth-largest city. At the same time, condo owners are either selling their units or renting their apartments below the cost of their mortgage, resulting in both "seller's fatigue" and "handcuffed sellers."

A wide range of reports estimate that the monthly rent of a one-bedroom apartment in Toronto has fallen as much as 23 per cent year-over-year, with prices coming down as low as $1,500 in some of the most appealing locations in the city. Although this is still relatively high compared to the rest of the Canadian real estate market, it is a welcomed relief for renters who have been paying sky-high prices for the privilege of residing in a red-hot urban centre.

Right now, is it even worth it to buy a property when rent is at a multi-year low?

According to Canada Mortgage and Housing Corporation (CMHC), households are paying large premiums to own instead of rent. The crown corporation suggested that condo owners are paying 86 per cent more to own than rent in a purpose-built building. This is the highest premium paid in any housing market of the country, including Vancouver (56 per cent) and Victoria (13 per cent).

This begs the question: will the Toronto and GTA rental market return to pre-pandemic conditions in 2021?

Toronto and GTA Rental Real Estate Market in 2021

When it comes to the COVID-19 pandemic, there is light at the end of the tunnel in Ontario. New cases seem to be declining, more people are getting vaccinated, and the economy is starting to reopen. Even if a third wave strikes amid South African and British variants, the province and many of its sectors have shown their resilience to adapt, survive, and thrive.

Once the Greater Toronto Area returns to some semblance of pre-pandemic life, which officials are optimistic could happen in the third quarter of 2021, the rental real estate market could be one of the first beneficiaries. From restrictions being lifted at the Canadian border and students returning to the classroom, to the short-term rental market being given the green light again, the Toronto and GTA rental real estate industry could rebound.

PricewaterhouseCoopers recently released a report on the outlook for Canada's housing sector. The multinational professional services network of firms predicts that the rental market will see benefits from a slowdown in home ownership and a backlog of immigrants. At the same time, it warned about the end of government income support and wage subsidy programs that could hurt tenants' ability to pay their rent. The organization also said that more university students are likely to enrol in virtual classes instead of in-person learning, which would impact short-term rental activity.

The Toronto Regional Real Estate Board (TRREB) also anticipates a surging GTA real estate market, amid a strengthening economy and widespread vaccinations.

"The pandemic certainly resulted in an unprecedented year for real estate in 2020, but it hasn't put a damper on the overall demand," said Jason Mercer, TRREB Chief Market Analyst, in a statement. "Looking ahead, a strengthening economy and renewed GTA population growth following widespread vaccinations will support the continued demand for both ownership and rental housing. But over the long run, the supply of listings will remain an issue, particularly in low-rise segments."

Put simply, the future largely depends on the vaccine rollout, the coronavirus variants, and the economic rebound.

Transformation of Toronto Rental Spaces?

Perhaps this is an opportunity to reimagine the rental market in Toronto and the rest of Canada's housing market. With more people working and studying remotely, our homes have become multifunctional spaces to accommodate learning, exercising, entertainment and more. And as a result of this, our need for space has been redefined. PwC called this the " amenitization of communities," whereby multi-purpose buildings allow new features to accommodate the new normal, such as videoconferencing rooms, dedicated areas for grocery delivery, and perhaps even additional green space.

Once the rental market returns to growth, developers might need to think about how to redesign apartment living for future generations, perhaps inspiring a new wave of rental demand.

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Toronto and GTA Rental Real Estate Market in 2021

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For years, it's been a tough battle for renters living in Toronto and the surrounding municipalities. Rents have only been on an upward trajectory as supply was limited and demand was through the roof.

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Video #2- Real Estate Expert John Pasalis breaks down Toronto Market

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Video #2- Real Estate Expert John Pasalis breaks down Toronto Market

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Most job losses ended up being in lower income household, higher income homeowners weren’t as impacted. When lockdown ended in June, buyers went back out into the market, and made prices accelerated (up 15%-20%). Short term, these buyers can afford to purchase a new home, but in a long-term state, its unaware if they’ll be able to keep up with the payments.
One thing I found extremely interesting is how much Durham Region housing has gone up. The Durham Region is supposed to be known as one of the most affordable regions in the GTA, but average prices a year ago were roughly $650,000. Today, they're well over $900,000.

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Toronto Housing Market:
Smaller homes such as semi-detached and townhomes are selling at a rapid pace.
Condo Market:
By the end of 2020, there was a surge of condo/apartment sales, mainly investors ready to jump back into the market. If the rental market stays stable and doesn't go flat again, investors will see this as a strength and jump right back into the market.

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In this month's Move Smartly report, we look at key trends to keep an eye on in the Toronto real estate market during 2021.
As Featured in the Move Smartly Report: Bubble-Like Conditions for Houses
As I noted in my December 2020 report , the market for single-family houses (not condo s) is showing alarming bubble-like symptoms reminiscent of what we saw in 2016 and 2017 in the GTA.

Not only is the GTA's suburban housing market very competitive today with prices up more than 20% in some regions, like Durham and Halton, but the market keeps getting hotter with every month that passes.

It's the combination of the velocity (a hot housing market today) and the acceleration in the market (a market that keeps getting hotter) that is concerning.

After GTA home prices fell in 2017, the GTA housing market remained relatively stable for 18 months with roughly 3 months of inventory. But since 2019, inventory has plummeted from 3.6 MOI in Jan 2019 to under one month in December 2020.

MOI levels are important because they are highly correlated with changes in house prices. We can see this by plotting the year-over-year change in average prices against the inverse of MOI (to make the relationship positive rather than negative) which is called the Sales-to-Inventory ratio.

This tight level of supply is resulting in 50% or more of houses selling for more than their asking price. The last time this happened was in 2016.

All early indicators point to a market that will continue to heat up as we move into the first quarter of 2021 market.

We are even seeing alarming signs of homeowners flipping houses for 25-30% more than they purchased them six months earlier - in the summer of 2020 without doing any renovations. We haven't seen this type of speculative behaviour in Toronto since the late 1980's.

If these trends continue, it could lead to an even more rapid acceleration in house prices fueled by extrapolative expectations rather than market fundamentals.
Will Investor Demand for Condos Stick?
The post lock-down rebound in the condo market was far softer than what we saw for houses, with the suburban condo market performing slightly better than the downtown condo market.

But as noted above, during the last six weeks of 2020, we saw a significant rebound in interest from condo investors looking to capitalize on the decline in condo prices with the hope that the rental and resale market will rebound in the near future.

Where the condo market goes from here will largely depend on what the rental market looks like in the first quarter.

If the rental market, both inventory levels and rents, remains stable (i.e., avoiding declines) then I expect investor demand to continue into 2021, effectively setting a floor on resale condo prices - something I discussed further in this BNN Bloomberg interview.

But if the rental market continues to soften, I suspect this may push investors back to the sidelines.

While inventory levels have declined slightly, prices continue to trend down.
Even with the recent decline in condo prices, it takes a lot of confidence to invest in a condo that is priced at 2019 levels when rents are at 2013 levels and falling. A Look Back at the CMHC Forecast
As mentioned above, shortly after the onset of COVID-19 early in 2020, CMHC came out with the most pessimistic forecast for Toronto's housing market expecting a sustained decline in both house sales and prices.

CMHC's forecast range included an upper (optimistic scenario) and lower (worse than expected) bound. The charts below compare CMHC's upper and lower bounds for the GTA for its entire forecast horizon against actual sale and price levels so far.

Note that CMHC sales are based on seasonally adjusted annual rates while actual sales are based on actual sales over the pervious twelve months.

Leaving aside the fact that we are still in the middle of this pandemic and that there is a way to go, it's quite clear that CMHC wasn't expecting house prices to reach today's level until 2023 at the earliest. So why did CMHC get their forecast so wrong?

I suspect one of the major reasons has to do with the fact that CMHC was viewing this economic slowdown from the lens of a traditional, and very deep recession, which was probably not the best way to look at the economic impacts from COVID-19, as noted in this Bank of Canada Analytical Note:
The economic impact of COVID-19 is often compared with past recessions, but this pandemic arguably has more in common with natural disasters. The key feature shared by natural disasters and pandemics is a sudden stop of economic activity caused by a shock that is unrelated to economic factors-in this case, a public health crisis. This contrasts with the 2008 recession, which reflected an underlying fragility in the global financial system that resulted in a lengthy downturn.
At our July online summit, Mikael Khan from the Bank of Canada shared with me some of the thinking behind the above-quoted research note - you can see the full Interview here.

But perhaps the biggest problem with CMHC's forecast was not that it was wrong (economists often expect to be), but that it was delivered with overconfidence that a decline in house prices was a foregone conclusion.

In an era when most politicians and civil servants provide scripted answers to questions, CMHC CEO Evan Siddall's "tell it like it is" style on Twitter was a breath of fresh air for his loyal fans. Take this tweet from May 27th in response to housing analysts that offered a more optimistic outlook for the housing market:
"Please question the motivation of anyone who wants you to believe prices will go up (yes, up) with our economy in slow motion, oil being given away, millions of Canadians on income support and a greater % of mortgages not being paid than we've seen since the Great Depression."
The problem with this type of impassioned messaging from the CEO of CMHC is that if you're going to make it, you better be absolutely certain you're going to be right.

If you're wrong, then the message Canadian's take from it ends up being the opposite of what was intended.

Eight months later, we hear the message that many consumers are taking away from this, which is that if home prices didn't crash " with our economy in slow motion, oil being given away, millions of Canadians on income support and a greater % of mortgages not being paid than we've seen since the Great Depression," then nothing can make house prices crash.

Of course, this is not true. As I mentioned above, we have in recent memory seen housing price corrections, such as the ones seen in the GTA suburbs in 2017 which negatively impacted average consumers.
But when authorities make such strong stands for and against positions, only to be wrong, consumer behaviour is at risk - such bold posturing may fuel the exuberance we are seeing in the housing market today.
Read my full analysis on this and other key trends in the January 2021 Move Smartly Report

Follow John's latest updates on Twitter, YouTube, Facebook or Instagram

John Pasalis is President of Realosophy Realty, a Toronto real estate brokerage which uses data analysis to advise residential real estate buyers, sellers and investors.

A specialist in real estate data analysis, John's research focuses on unlocking micro trends in the Greater Toronto Area real estate market. His research has been utilized by the Bank of Canada, the Canadian Mortgage and Housing Corporation (CMHC) and the International Monetary Fund (IMF).
Email John

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2021: The Year Ahead - What's Next for Toronto Real Estate?

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In this month's Move Smartly report, we look at key trends to keep an eye on in the Toronto real estate market during 2021. As Featured in the Move Smartly Report: Bubble-Like Conditions for Houses As I noted in my December 2020 report , the market for single-family houses (not condo s) is showing alarming bubble-like symptoms reminiscent of what we saw in 2016 and 2017 in the GTA.

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For the first time since the pandemic, mortgage rates are starting to rise again.
Currently, the lowest rate for a Canadian 5 year fixed mortgage right now is 1.64%.
It's very unlikely for the market to cool down anytime soon. The market in Toronto has never been hotter.

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Changes are on the horizon for Canadian mortgage rates, and the LCBO will be adjusting its store hours. Plus, a popular west coast burger institution is moving into Ontario. Business Editor Richard Southern reports.

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Changes coming to the housing market - CityNews Toronto

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Changes are on the horizon for Canadian mortgage rates, and the LCBO will be adjusting its store hours. Plus, a popular west coast burger institution is moving into Ontario. Business Editor Richard Southern reports.

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Rental properties have seen a historic downturn since the start of the pandemic and we're not sure when it'll get better. In September 2020, rental prices for downtown Toronto were at a low of $2,131 per month. Before the pandemic, landlords could throw a number in the air and someone would snatch it up and take it, but now, it's almost a cry for help to seek a tenant.

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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.

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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.

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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.

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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.

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Toronto condo, apartment rental prices drop again amid ongoing coronavirus pandemic

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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.

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Average rent price for Canada in February 2021 is $1,714, which is down 6% from February 2020.
Condo apartments have felt the biggest decline in 2021. Average rent in 2020 February was almost at $2,400, but now, in 2021, we're seeing number as low as $1,900.
Comparing province to province on monthly rental rates, British Columbia and Ontario have experienced very different rental numbers. British Columbia is doing better with the pandemic, going back to 2019, average rental rate was at $1,500. Compared to today's rate which is well above $1,900. Where as Ontario is quite the opposite. Back in 2019, Ontario was looking at an average of $2,100 and now in 2021, down to $1,900.

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The average rent for all Canadian properties listed on Rentals.ca in September was $1,769 per month, down 9.5% annually. The average rent has been nearly identical over the last four months between $1,769 and $1,771.

National Overview

The chart below shows the average monthly asking rent for single-family housing, townhouses, rental apartments, condominium apartments, and basement apartments cumulatively from January to September of this year (black) and last year (red). The top panel shows the average rent, with the bottom panel showing the median rent.

Prior to the pandemic, rental rates in both years were following a similar path, but 2020 dropped off during the early months of the pandemic and has stayed flat since.

Quarterly Rents by bedroom Type

September marked the end of the third quarter, and looking at trends on a quarterly basis can eliminate some of the volatility with smaller monthly sample sizes.

The next chart looks at the average rent and average rent per square foot for all property types by the number of bedrooms (one-bedroom to four-bedroom units only).

The average monthly rent is down for all bedroom types shown above, with one-bedroom suites falling 6.3% annually to just under $1,600. Two-bedroom units fell by 5.4% year over year to about $1,890 per month.

Three-bedroom units in the third quarter declined from $2,258 per month to $2,155 per month, a 4.6% decline. Four-bedroom homes saw the smallest drop (-3.6%) to $2,725 per month, as many tenants working from home seek out larger units to accommodate one, two or even more people working from home.

Change in Rent by Rounded Unit Size and Property Type

With many tenants seeking more space due to working from home, it is worth looking at whether that is impacting rental rates by unit size. To better isolate the impact of a unit's square footage, concentrating on one property type is ideal. The chart below looks at the annual change in average rent for apartments by rounded unit size (rounded to the nearest hundred) for the pandemic period of April to September 2020 versus the same six months last year (units from 350 square feet (sf) to 1,149 sf only).

The data confirms our theory conclusively. Rental apartments around 400 sf have seen average rents decline by 4% annually in Canada, while 1,100-square-foot rental apartments have seen average rents increase by 17%, with a visible stepping up for the unit sizes in between.

When looking at the change in listings on Rentals.ca by rounded unit size (not shown in the chart), the "stepping" is completely reversed, with the biggest growth in listings occurring for 400-square-foot listings, and the smallest growth in listings for 1,100-square-foot units.

Provincial Rental Rates

On a provincial level, British Columbia had an average rent of $2,065 per month, edging out Ontario ($2,040) for the highest average rents in September (for all property types).

British Columbia was one of just two provinces to post positive year-over-year rent growth, joining Quebec. Newfoundland ($950) had the lowest average rent in the country. Northwest Territories was the third highest at $1,804 per month, but the sample size of listings is relatively small.

British Columbia and Quebec posted year-over-year increases in average rent of 8% and 14% respectively, while the Northwest Territories was flat. The other provinces in Canada experienced rent deflation, from -1% in Newfoundland and -3% in Alberta, to -13% for Manitoba and Ontario, to -16% for New Brunswick.

The average rent levels should not be taken as an apples to apples comparison, as some provinces have higher shares of much larger single-family and townhouse units, while others are dominated by older rental apartments. In Ontario, there is an outsized share of high-rise condominium apartments with new interior finishes, premium views and a wide array of shared amenities.

Provincial Pricing by Property Type

With British Columbia and Quebec seeing rents increase year over year in September, it is important to understand what is driving that growth.

The chart below looks at the average rent for single-family properties, condominium apartments, and rental apartments in Alberta, British Columbia, Ontario, and Quebec during the pandemic period (April to September 2020) compared to the same six month period in 2019.

Average rental rates for single-family homes are down in each of the four provinces, with Alberta seeing the biggest drop at 14%. In terms of condominium apartment rental rates, Alberta is only down 2% annually, but British Columbia, Ontario and Quebec are down by 10% to 13% year over year.

The weakness in the Quebec and British Columbia condo rental markets is in stark contrast to their purpose-built rental markets, which are still experiencing double-digit annual rent growth. The sample sizes in each province are fairly substantial, and it is unlikely that the composition of the listings have a significant impact on average rent levels.

Municipal Rental Rates

The chart below presents data on the average rental apartment and condominium apartment rental rates by municipality and area in Canada for September 2020, with the annual percent change in average rent shown on the right (includes former municipalities prior to amalgamation in Toronto).

Montreal led all the major municipalities for highest rent appreciation at 17.2% for rental and condo apartments, along with Kitchener at 11.5%. Montreal and Kitchener were the only two major municipalities in all of the country to see positive growth (Hamilton and London were removed from this chart because of a high number of listings from new purpose-built rental apartment projects pulling the average rent up).

Two large Ontario municipalities, North York and Toronto, along with Winnipeg, all saw drops in rental rates of about 14%. Toronto's -14.1% annual rent drop is the worst in the country among major markets.

Vancouver posted the highest average annual rent at $2,249, followed by Toronto at $2,158; Etobicoke next at $2,095; Mississauga at $2,066; and Vaughan at $2,044. North York is the only other municipality showing average annual rents of above $2,000 per month at $2,025.

Municipal Rent Levels by Property Type

Breaking out the data further by property type and municipality (former municipal boundaries for Toronto) and concentrating on the markets of Vancouver, Calgary, Toronto and Montreal, the chart below shows the average rent on the horizontal axis and the average number of bedrooms on the vertical axis in the third quarter of this year.

In Vancouver, Toronto and Montreal, single-family properties for rent are pretty small at 2.7 bedrooms, 2.5 bedrooms and 2.8 bedrooms, respectively. In Calgary, single-family homes for rent are larger at 3.6 bedrooms on average.

Despite the earlier rental apartment chart showing higher priced growth for larger properties, the same upward pressure is not being applied to single-detached and semi-detached homes. In Vancouver, the average rent for single-family homes in Q3-2020 was $2,553 per month, lower than condo apartments, and down 29% annually. Condo rents in Vancouver are down 17% in Q3-2020 versus Q3-2019.

In Toronto, single-family rental rates are down 20% year over year in the third quarter, while condo rents are down 16% annually. The average rent for purpose-built apartments is $2,122 per month, down 3% from Q3-2019.

The most bizarre results are occurring in Montreal, with average condo rents down 17% annually, and the average rental apartment rents up 20% annually. It is likely that there are compositional issues here. Changes in the location, unit size, balcony size, level of finish, or unit views can vary significantly from quarter to quarter and impact the rental rates charged by landlords. Secondly, owners of rental apartments are more likely to offer rental incentives like a month or two free rent, that isn't net out of the Rentals.ca listing data.

Ottawa / Rental Rates in Proximity to Canadian Universities

There has been much discussion surrounding the fact that many Canadian universities are conducting classes virtually this fall, and what impact that has on the rental markets in proximity to those areas.

The following charts look at the annual change in rental rates for all property types in London, Edmonton, North York and Toronto close to Western University, The University of Alberta, Ryerson University and University of Toronto, as well as York University.

Edmonton

The University of Alberta in Edmonton is in postal code T6G, where the average rent in 2020 (January to September) for all property types was $1,429 per month, a decline of 1.3% from the same period in 2019. The postal codes to the east and south have been hit harder, with annual rent declines of 9.4% in T6E and 10.1% in T6H.

Interestingly, T5G, which is the Edmonton City Centre area downtown has seen average rents increase by 5.2% annually to $1,451 in 2020.

London

London has a strange pattern of rent changes annually, with N6A, where Western University is located, virtually unchanged in 2020 versus 2019 at $1,389 per month.

However, the postal codes to the north of the university have all experienced outsized growth rates with N6G (one of the most active postal codes in terms of listings on Rentals.ca) rising by 24% year over year. Postal code N5Y, just to the east of Western, has increased by nearly 15% annually, but still has a relatively low monthly rent of $1,196 per month.

North York / Vaughan

York University is in postal code M3J, where the average rent in 2020 is $1,935 per month for all property types. This rate is actually up year over year by 0.6%.

M3N to the west is up by nearly 10% annually to $1,719 per month, but most of the postal codes surrounding the York University are flat or down significantly.

The most impacted is L4K, which includes the Vaughan Corporate Centre, where the market experienced a decline in average rents of nearly 13% annually to $2,116 per month. The drop might look bad on the surface, as there is a significant number of units under construction in that market and scheduled for completion over the next 18 months. But there were two major completions in 2020 -- Met Condos and Nord Condos -- and these two buildings contain a high number of small suites, so the average rent per square foot actually increased by 28% annually, despite the drop in the monthly rent.

Downtown Toronto

There has been much discussion surrounding the drop in rents downtown due to the shutdown of many of the office towers, and a reduction in demand for short-term rentals from tourist and out-of-town contract workers. With Ryerson and U of T downtown, as well as several other colleges, many students decided to stay with their parents, or move back with their parents to save money and learn virtually.

The average rent in M5B where Ryerson University is has declined by about 9% annually to $2,212 per month, while M5S, where the University of Toronto is, has seen average rents decline by 5.7% annually to $2,564 per month. The only area of downtown Toronto to not experience a decline in rent was M5T, which was flat year over year at $2,464 per month. However, on a rent per-square-foot basis, M5T has declined by 2% annually.

Downtown Toronto Investor Condos

The decline in average rent downtown can be attributed to the high number of condos for rent. Demand has dropped off due to COVID-19, and there is a significant influx of new supply hitting the market via completed projects.

In downtown Toronto, condominium apartments often take two to four years to build given their size and complexity, so there is about a four-year lag between the sales and occupancy of these projects. In 2016 and 2017, the Toronto new condominium apartment market set record highs for sales, and those buildings are coming to completion now. A high share of those units were purchased by investors with the intent of renting them out to young professionals.

The chart below looks at a selection of condominium apartments completed between 2015 and 2019 in Toronto with at least 20 listings in April to September 2019 AND 20 or more listings in the pandemic-impacted period of April 2020 to September 2020. The average rent per square foot, annual change in listings, and annual change in average rent per square foot are shown.

Of the 23 projects on the list, 15 experienced a decline in their average rent per square foot, with the largest decline at One Bloor, the 76-storey tower at the corner of Yonge and Bloor, with a 24% decline year over year to $3.98 per square foot. Listings on Rentals.ca for this project increased by 81% annually.

Ten York, in Toronto's south core area, has experienced an increase in listings of 265% on Rentals.ca in 2020, and rents on a per-foot basis have declined by 11%.

The data suggests there might not be an urban exodus in Toronto's Village neighbourhood, as 365 Church has experienced a 9% increase in rent per square foot in April to September 2020 compared to the same period last year. The $4.09 per square foot is the second highest among the 23 projects on the chart.

However, it should be kept in mind these are asking rents, and can be skewed by a few landlords that refuse to accept the new reality that rents have declined in most parts of the city. Secondly, there are always compositional issues with listing samples, as there could be large penthouses with upgraded features in one period and less desirable lower-level units with no balconies in the next period.

Conclusion

The rental market on a national basis continues to tread water, with the average rent staying flat at about $1,770 per month over the last four months.

The data on a national basis suggests that tenants are looking for larger units, either by square footage or by number of bedrooms, but appear to be avoiding the most expensive single-family properties and condominium apartments in prime neighbourhoods.

The work-from-home phenomenon and pandemic continue to shift demand patterns as tenants look at different locations farther from their place of employment, cheaper properties, and units with more space.

The latest employment data suggests Canada added nearly 380,000 jobs in September, and analysts have estimated that 75% of employees who lost their jobs during the early months of the pandemic have been rehired or found new work.

With schools open and day cares re-opening, and the paring back of government assistance programs, more Canadians have the ability and motivation to return to work, and/or look for work. More employed Canadians and more hiring results in more demand for housing, and could send the rental trendline climbing upward again this winter.

Rentals.ca Data

The data used in this analysis is based on monthly listings from Rentals.ca. The data is much different than the more familiar numbers collected and published by Canada Mortgage Housing Corporation (CMHC). Rentals.ca data includes basement apartments, rental apartments, condominium apartments, townhouses, semi-detached houses and single-detached houses, where CMHC's primary rental data only includes rental apartments and rental townhouses. CMHC collects some data on the secondary market, but it is reported separately. The CMHC rental rates are based on the entire universe of purpose-built rental units in Canada (the stock), while Rentals.ca data is primarily based on the asking rents of vacated units only (the flow) -- this is a smaller sample size, but more representative of the actual market rent a prospective tenant encounters. The Rentals.ca data set typically produces much higher rental rates in comparison to CMHC, as vacated units are not subject to rent control. The average and median rental rates via Rentals.ca can also skew higher than CMHC's data for several reasons: The inclusion of larger and more expensive unit types like singles, row units and condos; the survivorship bias (overpriced units remain in the sample longer); and the multiple listings of the same property at different rent levels every month. It should also be noted that properties listed for above $5,000 a month and below $500 a month are eliminated from the sample of units analyzed. Also, short-term leases, single-room rentals, and furnished rental units are eliminated from the sample where identifiable.

Ben Myers

Ben is the President of Bullpen Research and Consulting Inc., a boutique residential real estate advisory firm.

With over 15 years of real estate research experience in both the United States and Canada, Ben has acquired extensive knowledge on land values, new home prices and rental rates, and macro-level housing trends. Ben has held several positions in Toronto, including urban economist at Altus Clayton, and Executive Vice President at condominium apartment data tracking firm Urbanation Inc. Ben has previously been the keynote speaker at ULI and PWC's flagship Emerging Trends Conference.

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The average rent for all Canadian properties listed on Rentals.ca in September was $1,769 per month, down 9.5% annually. The average rent has been nearly identical over the last four months between $1,769 and $1,771.

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The number of condos listed for sale/ rent in the last quarter of 2020 doubled from the same time the previous year.
Meanwhile, the average selling price fell 1.1% at about $600,000 for condos. Those who purchased condos and then turned around to rent them out, had to charge less for rent a month then they would've a year ago due to the pandemic.
The time to buy houses was at the beginning of the pandemic because once the borders open up again and vaccinations start to take off, condo prices will skyrocket once again.

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NEWS -- If you were on the lookout for a Greater Toronto Area condo or apartment to rent or own late last year, new data from the region's real estate board shows you might have had an edge in negotiations.

The number of condos listed for sale or rent in the area in the fourth quarter of 2020 were up by double and sometimes triple digits from the year before, while prices were down, according to two reports released by the Toronto Regional Real Estate Board on Wednesday.

"The increase in supply...resulted in much more choice and bargaining power for buyers and a moderate decline in average selling prices," TRREB president Lisa Patel said in a statement.

Patel also noticed the market tipped in favour of renters, who had plenty of properties that sat on the market for weeks or months to choose from.

Her observations encompass the last few months of 2020 -- a period when the Greater Toronto Area was staring down tougher COVID-19 lockdowns, the looming possibility of a tax on vacant units and a softening of the short-term rental market triggered by travel bans and work from home orders.

TRREB said condo and apartment sales in the quarter reached 6,469, up 20.7 per cent compared to 5,358 in 2019. New listings climbed by almost 92 per cent to hit 12,298, up from 6,407 in the year prior, while active listings doubled to reach 4,294.

The average selling price fell 1.1 per cent to reach $610,044 in the quarter, down from $616,771 a year earlier. Average selling prices in the city of Toronto decreased 2.4 per cent to $644,516.

Davelle Morrison, a Toronto broker with Bosley Real Estate Ltd., noticed the period was a reversal from the usually sleepy December holiday season.

"Towards the end of December people just decided to start snapping up what they could," she said.

"One of the reasons why December is usually so dead is because everybody's at Christmas parties and shopping for Christmas gifts, but now, because of COVID, you're not doing any of those things, so all they were doing is looking at real estate."

Meanwhile, demand for condo rental was reaching record highs, Patel said. TRREB's new data showed 12,584 condos were rented in the quarter, up by about 86 per cent from the 6,756 rentals in the same period last year. The number listed for rent soared by 131.6 per cent, rising from 33,280 and 14,371.

"Growth in the number of available units far outstripped growth in rental transactions, as many investors chose to make their units available due to the impact of COVID-19 on tourism and the short-term rental market," said Patel.

Those who offered places for rent ended up charging less for rent than they would have a year ago. The average one-bedroom condo rent unit was down by 16.5 per cent year over year to $1,845 compared to $2,209. The average two-bedroom condo rent was down by 14.5 per cent over the same time period to $2,453 compared to $2,868.

That pattern seems to be continuing in 2021, Morrison said,

"I have a few clients right now where their properties are vacant because we just can't even get tenants in them," she said.

"It's on my to do list to try to get to take another price cut."

But her clients on the market for houses are having a harder time.

Prices are soaring and people are scrambling to make offers.

Morrison has heard of houses in Mississauga getting 70 offers, ones in Durham Region getting 30 offers, and places in Toronto getting 18 offers.

Bully offers are becoming common too, she said.

She believes the time to buy houses was when the pandemic first hit and sellers were feeling skittish about the uncertain times, but condo buyers still have a window of opportunity.

"If you want to buy a condo you should have bought it in December, but really now is the absolute time to get in there and buy something because I think the second that the borders open up and people get vaccinated, the condo market is going to take off again."

This report by The Canadian Press was first published Jan. 27, 2021.

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Buying or renting a condo in Toronto? Experts say the market has tipped in your favour

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NEWS -- If you were on the lookout for a Greater Toronto Area condo or apartment to rent or own late last year, new data from the region's real estate board shows you might have had an edge in negotiations.

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This comparison chart shows how much homes have increased since the start of this pandemic.

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You can see from this comparison chart how much rental units have dropped from Quarter 4 in 2019, to Quarter 4 in 2020.

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The above photos were taken from the website below.

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The above photos were taken from the website below.

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Toronto Real Estate Board com is the online information source for comprehensive coverage of real estate listings and services in the Greater Toronto area.

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Welcome to my wall! Here you will learn about the Toronto/ Canada Housing Market, mainly how the Global Pandemic has changed the way people buy and sell homes, as well as how drastically the rental market has changed over the course of just one year.

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What did I learn about my chosen topic that surprised me the most?

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What did I learn about my chosen topic that surprised me the most?

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Something that really surprised me after doing all the research for this assignment is how badly the rental market suffered during the Pandemic. I knew the housing market and buying homes skyrocketed but I never realized how cheap rental properties became, especially condos downtown Toronto.

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Provide a real-life example of how this topic is relevant or interesting for me.

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Provide a real-life example of how this topic is relevant or interesting for me.

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I am currently looking for a new place to move to, most likely a a condo or apartment for rent. So, I chose this topic with that in mind and it has really opened my eyes on where to look when finding a rental. After doing lots of research, I realize that if I want to find a condo, the best time for me to rent a place out is now. Sooner rather than later the rental market is going to jump up again, so now's the time.

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If I could pass on any knowledge to friends/family, what would it be?

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If I could pass on any knowledge to friends/family, what would it be?

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If there's one thing I can take from all the research I've done is if you can, buy an apartment, and rent it out. The time to buy apartments is now and rentals are bound to go up soon, so if you're looking for extra income, rental properties is where to go!