Toronto rents hit three-year low — but brace for a swift comeback: Urbanation

financialpost.com:

Toronto’s housing market offered a rare moment of relief for renters, as average rents dropped for the first time in three years.

According to Urbanation Inc., a real estate consulting and market research firm, average condo rents were down 1.2 per cent year-over-year in the second quarter — the first annual decline since 2021, following the onset of the COVID-19 pandemic. However, Urbanation warns the reprieve isn’t likely to last long.

The firm’s latest report shows the average condo rent now stands at $3.97 per square foot in Toronto, translating to $2,723 a month for a typical 686-square-foot unit. Studio apartments had the sharpest decline, with rents falling 3.9 per cent to $2,047 for a typical 395-square-foot unit. One bedroom units weren’t far behind, decreasing by 1.8 per cent to $2,450 for 591 square feet. Rental rates for two bedrooms dipped by 0.9 per cent, averaging $3,143 for 889 square feet, while three-bedroom units held relatively steady, declining just 0.6 per cent to $3,988 for 1,041 square feet.

The 905 area was the only region where rents increased, rising 2.0 per cent to $2,610 for a 719-square-foot unit. In contrast, average rents in the City of Toronto’s fell by 2.1 per cent to $2,765 for a 674-square-foot unit.

Despite the drop in rates, demand for rental units remains high. Toronto had an all-time record 16,169 condo lease transactions in the second quarter, a 29 per cent rise from the previous year. Typically, high demand applies upward pressure on prices, but due to the surge in listings (total number of condos up 47 per cent; 82 per cent for newly registered ones) rents have decreased.

Urbanation president Shaun Hildebrand noted that the current softening in rents is due to a temporary spike