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Short supply of rentals pressures rent higher: average $2,219; 3 bedroom breaks $3,000 average

The ongoing short supply of rental units — expected to only get worse as purpose-built development dries up under new Ontario rules — has driven the average rent for an apartment over $2,200 for the first time. With 2 bedrooms averaging nearly $2500 and 3 bedrooms breaking $3,000 it is not good news for families who need larger apartments. Rents are expected to increase further as families compete for scarce vacancies.

Multiple offers are reported by condo-owner landlords within hours of ads being placed. It is a good time to be a condo landlord; not such a good time to be a tenant.

 

Condo.ca chart shows reported average rents by size and type, comparing 2017 (blue and higher) to 2016 same period Q3 (in green.) Data from Urbanation.

 

In a nutshell, you can rent a 1 bedroom this year for what a studio cost same period last year. You can rent a 2-bedroom this year for what it cost for a 2 bedroom plus den last year, and so on. Some areas, the differences are even steeper.

Urbanation reports: “The scarcity of available one bedroom rentals led to a sharp increase in the share of units leasing for over asking rent by at least $25, from 28% a year ago to 42% in Q3-2017.”

Average rent $2,219

Urbanation, an authoritative source of information on the Toronto condominium market, reports averages for all sizes of condo apartments for 3rd quarter 2017. All types are up substantially from 2016. These are averages for all regions (some areas are higher, some lower):

  • Studio (up to 499 square feet) at $1,672 in Q3 2017, over last year’s $1,475
  • 1-bedroom (500-599 square feet) at $1,839 in Q3 2017, over last year’s $1,647
  • 1 bedroom plus den (600-699 square feet) at $1,984 in Q3 2017, over last year’s $1,769
  • 2 bedroom (800-899 square feet) at $2,498 in Q3 2017, over last year’s $2,220
  • 2 bedroom plus den (900-999 square feet) at $2,510 in Q3 2017, over last year’s $2,368
  • 3 bedroom (1,000-1,199) at $3,065 in Q3 2017, over last year’s $2,882.

This represents an overall average of $2,219 for an average size home of 743 square feet — an increase of $232 overall in 12 months.

Volume of leases for smaller units declined

Smaller condos declined in overall lease volume from last year, on short supply, while the overall average is about the same as last year. With a shortage of units in inventory, the numbers for Q4 will likely decline for next year — at a time when there are more prospective tenants than ever.

The need for condo owners to rent properties is high in the market, with the decline of purpose-built developments.  [As reported in Condo.ca, some purpose-built developments already under construction are being converted to condominiums due to the new rental rules>>]

According to Urbanation release:

“The total proposed inventory of purpose-built rental projects in the GTA reached 30,980 units in Q3-2017, little changed from the previous quarter. The 1,875 new units proposed during the past three months was mostly offset by the movement of some projects out of the proposal stage and into the construction phase, as well as the conversion of some projects to condominium following the introduction of rent control to new units.”

“The intense competition between renters in Toronto shows no signs of letting up in the near future,” said Shaun Hildebrand, Urbanation’s Senior Vice President. “While it’s encouraging to see that rental proposals are still coming in, the level of new development needs to ramp up significantly in order to meet demand.”

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