Tenants catching a break as rents fall, landlords negotiate

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ToggleLaura O’Brien and her partner had to find an apartment for Nov. 1.
O’Brien said their landlord gave them two months to move out after selling the Bloordale triplex where they’d lived since 2020, and although they considered fighting at the Landlord and Tenant Board, they ultimately decided to leave. By the time they had explored their options and negotiated an assistance package with the landlord, they had just a month to find a new place.
The couple viewed 20 different units, but almost everything was more expensive, yet smaller, than their apartment.
Finally, they settled on a one-bedroom rental apartment near High Park for $2,400 — $400 more than they had hoped to spend, and $500 more than they were paying for their last apartment.
And while she’s excited to “start fresh at a new place,” close to nature with the amenities they wanted, “I know we are paying through the nose for it,” O’Brien said.
It’s no surprise prospective renters feel disempowered at the sight of the same asking prices from last year’s hot rental market.
But realtors say they’ve noticed a change, one that may put renters in a better position.
Rental units of all types across Toronto have sometimes been sitting on the market for weeks or even months as landlords wait for tenants who will lease at their desired price. The vacancies represent a shift from where the market was around the same time last year when units at aggressive prices would receive multiple offers and be leased within days.
That’s led some landlords to start accept offers below asking, realtors say.
Asking rents for purpose-built rental apartments and condo units decreased by similar rates; 8 per cent and 7.73 per cent respectively.
That doesn’t mean the market has become more affordable, as prices in Toronto remained about 23 per cent higher this September than the same month in 2021, according to Urbanation, with an average price tag of $2,668. And this year to date, asking rent prices were still a whopping 30 per cent higher than in 2021, with an average price of $2,759.
But, right now, experts are pointing to several factors that could be helping renters catch a break on rent, from lower interest rates to more condos units on the market, and say prices could continue to drop for months to come.
Tenants have a chance to negotiate
Real estate broker Antonina Dohot said she used to get 16 or 17 properties leased per month and is now closing six or seven deals per month.
Landlords have gotten used to last year’s hot market, Dohot said, and they’re hesitant to lower prices. But if a unit isn’t leased within three months, she’ll encourage the client to relist at a lower price or start accepting negotiations.
“Sometimes, it’s a little bit challenging to absorb the reality for most of the clients,” Dohot said. “But we as agents … we’re just looking at the numbers we’re seeing in the market.”
Leasing agent Justin Bailey said the market conditions give tenants the ability to be a bit pickier than before.
He has found condo owners, in particular, to be open to dropping prices as they’re competing with other units in the same building, which offer the same amenities and neighbourhood features, Bailey said.
“Especially in new builds, it’s very much a race to the bottom when it comes to pricing,” he said. “If you have a property listed for $2,700 and $2,750, the minor differences in the unit itself won’t make a difference to the actual tenant. They’ll just go for the lower price.”
Leonid Kotov, realtor and founder of multiplex developer Greenstreet Flats, said he has noticed a five to 10 per cent drop in the price of multiplex units as more condo and rental supply enters the market, and demand softens.
Units can “easily” sit on the market for one or two months, he said, especially if they’re not priced competitively.
If landlords don’t want to lose months’ worth of rent money while their units sit vacant, “of course” they will accept negotiations, Kotov said.
What changed: more supply enters the market
From January to September, Toronto had a near-record high of about 20,500 home completions — which experts say is increasing rental supply and softening rent prices. According to Canada Mortgage and Housing Corp. (CMHC) data, roughly 15,500 completions were condo units and 3,800 were purpose-built rental apartments.
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While the supply influx will ease pressure on the rental market overall, Nanowski believes condo units will be more prone to price decreases than purpose-built rentals because purpose-built rentals tend to have lower prices already. Also, purpose-built rentals typically aren’t competing directly with condos for the same tenant pool, unless they’re on the higher end.
There’s also a record number of units under construction, he said, which will continue to put “downward pressure” on rents. As of September, there were about 45,000 condo units and nearly 16,000 purpose-built rentals under construction in the city.
However, analysts are expecting another shift on the horizon. They anticipate a shortage of condos entering the market in the coming years, as investors have largely shunned the preconstruction condo market due to high interest rates and rents that don’t cover carrying costs. That could likely mean less supply and higher prices down the line.
What changed: demand pulls back
Shaun Hildebrand, president of Urbanation, said prices began to dip in February after increasing rapidly in 2022 and 2023, and dropped more significantly in the summer months.
“It sort of began as a rebalancing of overheated conditions,” he said.
But Hildebrand believes the “key factor” was a decrease in demand from international students as most temporary residents are renters, he said.
Murtaza Haider, a data science and real estate management professor at Toronto Metropolitan University, however, said he believes international student enrolment may have played only a small part in prices changing.
International students often share small apartments or basement units, sometimes in the suburbs, he explained.
“You would have four or five students in a one-bedroom apartment sharing that,” Haider said. “It wasn’t five students taking over five units.”
And if the drop in international students had played a significant role in Toronto prices dropping, Haider believes they also would have dropped in other university towns. However, he pointed out that, according to the Urbanation and Rentals.ca report, Saskatoon prices rose 25 per cent, Edmonton prices increased 12 per cent, Winnipeg prices rose 15 per cent and Quebec City rents were up 24 per cent.
Hildebrand, on the other hand, said prices rose in those markets because people fled larger, more expensive cities for less expensive areas and boosted demand there.
Another factor that could have reduced rental demand is the drop in borrowing costs pushing some renters into homeownership, experts said.
“People who have been sitting on the margins waiting to vacate rental (housing) and occupy owner-occupied housing, probably, they have started making those transitions, creating some space in the rental market,” Haider said.
How long will dropping prices last?
With a supply shortage on the horizon, experts say the lull in rent prices may not last long.
In order to create lasting affordability, there need to be short-, medium- and long-term solutions, said Douglas Kwan, the director of advocacy and legal services at the Advocacy Centre for Tenants Ontario (ACTO).
In the long-term, governments can lease land to non-profits to build affordable units.
Although the 2018 change was meant to encourage builders to create more purpose-built rentals, Kwan said “people are experiencing the pain” of the policy as tenants in newer units face rent increases of hundreds or even thousands of dollars.
O’Brien, for her part, hopes prices will stay down until her lease ends.
“I honestly think in a year or so, we’ll start searching on our own time,” she said. “But for now, this is where we’ll be.”