It seems to me that there is far more rental supply on the market right now than there has been in a long time.
It's still very early in January and all my buyers are anxious for new, good listings. Maybe it's because of the lack of snow (for now), or maybe because inventory really died down in December, but buyers are ready to go. There's just not much out there to show! I've got a couple sellers who are getting their places ready to list a little earlier than usual so we can capitalize on this lack of inventory. My buyer list keeps growing and I imagine this Spring is going to be nuts!
With all this waiting around, I've had some extra time to think. I actually write most of my blogs in my head at the gym each morning and yesterday was an awesome workout because my thoughts kept racing :)
I do a lot of rentals - I actually enjoy them. Some agents won't touch a rental lead but I'll take them all day. New clients, new potential buyers down the road, new referral sources... you never know who you'll meet. So I think it's safe to say I've got a pretty good handle on the rental market. And lately, well...for the first time in a while it seems like rental units are actually sitting on the market a little longer, more landlords have been dropping their prices, and there are just more options out there than usual.
I wrote a blog post in the Spring of last year where it felt like the 2019 rental market was starting to slow down because of all the supply of newly completed condos out there (check it out if you missed it - Is the Downtown Toronto Rental Market Finally Calming Down?) and while the rental market remained resilient throughout the year and rent prices continued to rise, it did feel a little calmer than years prior. And 2020 rentals just feel really, really calm right now.
Maybe it's the AirBnB changes pushing more rental units back on the market. Maybe it's just seasonal (I mean, who wants to move in December/January if they don't have to). Maybe it's just a coincidence. But right now, tenants have choice. And, from my experience at least, it seems like rent prices have actually come down. At least a little.
So how many units are actually available for rent in the core right now?
Let's focus on 1-bed/1-bath units, under 700 sq ft, without parking, between the DVP and Bathurst, from Queen down to the lake, because I think that's a fair representation of what most single professionals moving downtown would be looking for:
Under 500 sq ft - 80 units available, priced between $1750/mo and $2400/mo.
Between 500 and 599 sq ft - 130 units available, priced between $1850/mo and $2600/mo.
Between 600 and 699 sq ft - 54 units available, priced between $1950/mo and $2800/mo.
That's a total of 264 1-bed/1-bath units in the core available on MLS right now.
Keep in mind, this doesn't include units with a den, with parking, or anything over 700 sq ft. Or anything north of Queen St. Or anything off MLS (like owners posting privately on Kijiji, etc). That would certainly push up the count.
To me, that feels like a solid amount of inventory and sure doesn't feel like 0% vacancy, as the media likes to spew about every chance it gets.
So how many units typically get rented each month?
In December 2019, 120 units were leased on MLS that fall into the bucket as I described above (1-bed/1-bath, no den, etc).
In November 2019, 135 units.
So at today's inventory levels, we're looking at about 2 months of rental stock available.
You can argue that's a lot or not enough, but I'd say it's probably enough to keep prices somewhat tempered for now.
And don't forget that with more and more condos taking occupancy in the next several months, it kinda makes me feel like rental prices should actually stabilize in 2020.
Could rents actually drop?
I mean, it's hard to argue that overall supply won't improve with projects like Canary Block in Canary District, East United on the east side, The Wyatt in Regent Park, Pier 27 Tower and Daniels Lighthouse Towers down by Yonge and the lake, King Blue in King West, Garrison Point near Liberty Village, The Lakeshore and Lakefront towers near Fort York - all of which are either occupying or will be in the coming months and beyond. And you can be sure these will bring (or are already bringing) a slew of new units to the rental market as they near completion, often times 20 to 30+ units all at once per building.
I'm never one to make predictions, but all these bobbling media heads are predicting 1-bed rents to rise around 7% in 2020. I'm honestly not sure how they come to these conclusions or if they just pull random numbers to grab headlines.
So I'm not making a prediction. I'm not even saying that I'm right. All I'm saying is that if you're looking for a 1-bed unit to rent in the core right now, I can show you more places than you'll need and you'll have choice. And you might even be able to negotiate! Prices still won't be cheap mind you, so don't call me full of hope thinking I'll find you an $1800/mo 1-bed in King West. It's still Toronto after all and Toronto is a damn expensive place to rent. But it may not be as dire out there as you might have heard. At least not right now anyway...
On a related note - My workout was so good that I was going to extend this post into a rant about pre-construction prices and what rental rates would need to be in 3-4 years to make a $1300/sq ft investment today actually make sense, but I decided to cut myself off here before this post turned into a novel. But check out what I said about buying pre-construction in the fall of 2018. I still feel the same way today - Does Pre-Construction as an Investment in Toronto Even Make Sense Anymore?
Have you checked out my previous blog posts?
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Your Toronto condo lover,
iPro Realty Ltd, Brokerage
Direct: 647-223-1679 (call/text)