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Bidding wars return to Toronto’s rental market

Toronto’s rental market has made a strong comeback, and started to resemble its pre-COVID levels, following months of the pandemic-induced rising rental vacancies and declining monthly rents.

For the third straight month in a row, average rents for all property types in the GTA rose in June, up 0.9% month-over-month to $2,017. While the average monthly rent is still around $200 lower (9%) than a year ago and more than $440 off the average monthly rent at the market peak ($2,461) in November 2019, it still indicates that the market is turning a corner and trending back up again.

In the condo market — a major source of Toronto’s rental supply — activity is also booming, with lease activity showing major signs of improvement during Q2-2021, with activity reaching a record high. The number of leases signed for condominium rentals in the GTA more than doubled from a year ago, surging 108% to 12,747 units — the highest Q2 level on record.

The average monthly rent across all Toronto condos and apartments came in at $2,143 last month, according to the latest National Rent Report from Rentals.ca and Bullpen Research & Consulting.

This represents a year-over-year decrease of about four per cent, but an increase of four per cent on a monthly basis. Broken down by unit size, single-bedroom units rose one per cent between June and July to reach a new average of $1,855.

Two-bedrooms, meanwhile, rose 4.2 per cent to reach an average price of $2,606, with “larger and more centrally located luxury units” increasing in price at a faster rate than more affordable options.

“With the 75th and 90th percentile units increasing at a faster rate than the 10th and 25th percentile units in Toronto, the idea that larger and more centrally located luxury units are increasing in demand is reinforced,” said the newly-released report.

“This continues to bolster the idea that more and more tenants are searching for larger living spaces to accommodate working from home and going out less.”

Demand for this specific type of large, well-located unit has ushered in the return of bidding wars for rental suites — a phenomenon that near-completely disappeared amid the pandemic when rent prices tanked and landlords actually started courting potential tenants with unprecedented incentives.

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