Rental prices drop by nearly $400 from peak
Tenants in Toronto are gaining negotiating power as rents fall and landlords begin offering incentives to fill units.
The average cost of a one-bedroom apartment in downtown Toronto has dropped to $2,224, nearly $400 less than the October 2023 peak of $2,600, a new report from Liv Rent shows. With rising inventory and slowing demand, real estate experts say the urgency that once defined the rental market has dissipated.
“What really stands out to us is that the rental market has lost its sense of urgency,” said Matisse Yiu, marketing manager at Liv Rent. “We’re no longer seeing people scramble to secure a unit within the first few hours of it being listed.”
The drop in prices is giving tenants a rare moment of leverage. Landlords are now offering incentives such as one month of free rent to attract tenants, something virtually unheard of during the city's recent stretch of red-hot rental demand.
Several factors are contributing to the shift. The condo market has experienced a rise in supply, and demand from international students has cooled due to new federal limits on study permits. At the same time, an uncertain job market and the broader cost-of-living crisis have prompted many renters to move back in with family or seek shared accommodations.
While rents are falling across much of the Greater Toronto Area (GTA), prices in nearby regions such as Niagara Falls are rising as renters opt for more affordable alternatives outside the city, Yiu points out.
"What's interesting is that within the GTA we saw the numbers drop, but outside the GTA we saw a slight increase in rent prices," said Yiu.
Real estate agents believe this window of tenant-friendly conditions may not last long. With spring in full swing, rental activity typically picks up.
“We’ll be seeing more activity and people moving into units that are a little bit bigger for the same price,” said Desmond Brown, a real estate agent with RE/MAX Hallmark Realty. He noted that many tenants are now using this moment to upgrade their space without paying significantly more.
Meanwhile, the broader housing market in the Greater Toronto Area continues to reflect buyer hesitation. Home sales were down 23.3% year over year in April, according to the Toronto Regional Real Estate Board (TRREB), with just 5,601 homes sold compared to 7,302 in April 2024.
However, new listings are on the rise. TRREB reported that 18,836 properties hit the market in April, up 8.1% compared to the same month last year. Seasonally adjusted sales were up 1.8% from March, showing some signs of movement despite lingering uncertainty.
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While current conditions are favourable for renters and prospective homebuyers, market momentum may depend on broader economic and geopolitical developments.
“Following the recent federal election, many households across the GTA are closely monitoring the evolution of our trade relationship with the United States,” said TRREB president Elechia Barry-Sproule. “If this relationship moves in a positive direction, we could see an uptick in transactions driven by improved consumer confidence and a market that is both more affordable and better supplied.”
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