For the first time in years, the city of Toronto has seen rental sales declining. Within a month rental demand is dropping due to residents losing their jobs, a shrink in immigration flow, and development projects either slowing down or being put on hold indefinitely.
Shaun Hildebrand from market research firm Urbanation says the rental market could start to take on a new form post-COVID-19. “The impact on rents will be something to watch, which will also be influenced by the timing of the record number of units that were expected to be complete this year,” Hildebrand says.
The current changes already demonstrate a dramatic shift in the market due to protective measures and economic uncertainty of this pandemic. Since COVID-19 first began, we’ve seen a decline in leases with volume down 25% compared to the same period last year.
Hildebrand reports that the second quarter of 2020 was projected to see 10,000 condos and 1,000 purpose-built rentals, most of which will be delayed or opening in early 2021. The delays will put more pressure on the condominium investors who are motivated to rent out their units quickly. In addition, monthly rental prices may be lowered to encourage more people to move in. Plus, the introduction of new buildings will put competitive pressure on investors. As of right now, there is room to accept lower prices and we are already seeing some buildings doing so.
In Canada, Toronto remains the most expensive city to live in. Lower rental prices may be what Toronto tenants need right now, especially for those returning to work following months of unemployment.
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