Demand for rental condos is falling swiftly in Toronto, but according to two reports from the Toronto Regional Real Estate Board (TRREB), while rental prices are also on their way down, the cost to buy continues to go up.
According to TRREB, second-quarter 2020 condominium apartment sales amounted to 3,459, down 50.8% compared to 7,024 sales in Q2 of 2019. The number of new condominium apartment listings also fell sharply. Q2 2020 also saw 8,717 total listings, down 21.6% compared to 11,114 new listings in Q2 2019.
“The condominium apartment market experienced a dip in sales and new listings in the second quarter of 2020, as many potential buyers moved to the sidelines as a result of public health measures taken to combat COVID-19 and the resulting economic downturn,” said TRREB President Lisa Patel in a release. “With the overall housing market trending toward recovery in June, condo apartment sales will likely improve in the third quarter.”
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Despite the shifts, the average selling price for condo apartments continues to climb, and at an average cost of $619,707, it now sits at 5.1% more than Q2 2019.
“It will be important to watch the relationship between condominium apartment sales and new listings as we move through the second half of 2020,” said Jason Mercer, TRREB’s chief market analyst, in the release. “If economic recovery is sustained, the demand for condo apartments will improve. However, the prospect of stricter regulations on short-term rentals and softer rental market conditions could fuel increased listings of investor-held units.”
TRREB also found that the number of condominium apartments listed for rent during Q2 2020 was up by 42% compared to the same period during the previous year, but rentals were down by almost 25%. Noting that job losses during the pandemic have no doubt contributed to the number of available units, there was a pre-existing trend of increased listings.
“We saw the continuation of the pattern experienced over the past year, with year-over-year growth in rental listings far outstripping growth in rental transactions, resulting in a much better-supplied market and a moderating pace of rent growth,” Patel said in the release.
Rental prices are also going down slightly in the city, as TRREB found the average one-bedroom condominium apartment rent was $2,083 in Q2 2020, 5% less than Q2 2019, while two-bedroom condo apartments averaged $2,713 — a 5.6% decline from Q2 2019.
According to TRREB’s analysts, this increased choice has given more negotiating power to renters, resulting in the declines.