In a 450-square-foot condo, the only place Stephen Tyson was able to put his desk was right beside his bed.
Before COVID-19, it seemed like a good idea to trade living space for downtown Toronto’s many amenities. But after? Not so much.
“You can’t enjoy the restaurants; there’s not that social interaction and energy … It doesn’t really make sense paying a lot of money for a shoe box when you don’t get to use the benefits of Toronto,” said Tyson.
So when the pandemic hit, working and sleeping in the same room got old quickly, and he opted to leave Toronto’s Liberty Village for a unit more than twice the size in Hamilton. Not only has he gained a spare room for a designated home office, Tyson says he has more peace of mind knowing that he’s saving about $400 a month.
He’s not the only one re-evaluating his home situation. In the wake of COVID-19, real estate experts say more and more people are leaving prime Toronto neighbourhoods in search of more space. Some are even opting to buy homes as far away as Muskoka, since being close to the office doesn’t matter much anymore as they’re working from home.
More rental choices, better rental prices
The exodus is one of the reasons why there are more rental units on the market, real estate experts say.
New third quarter numbers from the Toronto Real Estate Board (TREB) show there are now 113 per cent more units available for lease on the market than in the third quarter of last year, when there were 16,350 units up for rent.
Now there are nearly 35,000 available in the Greater Toronto Area.
Most renters now have their pick of units, says Corey Ash, a real estate agent with North Group who has been focusing on rental properties for the last two years.
“Landlords are giving incentives; they’re offering tenants one month free,” said Ash. “Last year, I’d be going into bidding wars for my clients.”
The smaller 500-square-foot units are also getting harder to rent. Ash says two-bedroom condos and apartments are more appealing since people are looking for the extra space.
“Clients are finding two-bedrooms for a little more than what they would have paid for a nice one-bedroom last year,” said Ash.
Real estate agent Ivana Rezo says one-bedroom units are still moving on the market, but only if they’re on the bigger side and have something extra to offer like a view, storage or a large outdoor space. The ones that don’t are staying on the market for months at a time.
Prices have also gone down for one-bedroom units across the city. TREB’s numbers show that this time last year, the average one-bedroom was going for $2,262, whereas now they’re renting for $2,012.
But the lower rents aren’t enough of an incentive for some to stay in the city.
Just last week, Pranav Bakaraju gave his landlord notice that he’ll be leaving at the end of the year, choosing instead to move back in with his parents in Mississauga.
“I just thought it makes sense for me to save money, lower my risk, and spend some time reconnecting with family,” said Bakaraju.
New units hit the market as condo construction continues
At the start of the pandemic, his roommate left and Bakaraju had a difficult time finding a new one for the two-bedroom condo he was renting near Bathurst Street and King Street West.
He even lowered the rent, but that took a financial toll. He ended up moving to a slightly cheaper place, but now wants to get out of the city for a while.
The new short-term listing regulations that came into effect in September are also affecting the rental market, since those would-be Airbnb units are now being listed as long-term rentals, says Rezo.
In addition to that, immigration has ground to a halt due to the pandemic.
“Usually, during the summer, I was getting a lot of clients moving into the core because they were coming here to study, whether it was undergrad or post-grad,” said Rezo.
“Now, there’s no one.”
“I used to also lease out some of my rental properties to people coming to work in the city on movie sets; that’s also dried up,” said Rezo, who works for Royal LePage.
What’s next for Toronto’s not-so-hot rental market?
In high-demand areas like Liberty Village, King West and Corktown, condos are still going up and the investors who bought properties are starting to list them on the rental market, adding to the sizeable pandemic inventory. That means rents will keep dropping if the situation doesn’t change.
So what’s the future hold for Toronto’s once soaring rental market?
John Pasalis, president of Realosophy Realty, says it depends on several different factors.
“How long [the pandemic] lasts, how low rents go and how well financed investors are,” said Pasalis.
“Some investors are going to be forced to sell, and condo sales are already down in Toronto.”
At the moment, experts agree it’s too early to tell where the market will go; all investors, landlords and renters can do is sit and wait.