Condo apartment listings in Toronto surged while sales dropped sharply in the second quarter of 2024, as borrowing costs remained high.
The Toronto Regional Real Estate Board (TRREB) reported a rise in condominium apartment rentals during this period, compared to the same quarter in 2023. However, rental listings outpaced this increase, providing renters with more choices and negotiating power for lower rents.
“Record population growth kept the demand for condo rental apartments high in the second quarter,” said TRREB president Jennifer Pearce. “The affordability challenges associated with high mortgage payments for ownership housing also continued to be a driver of rental demand, especially given that we have seen some relief in rents over the past year.”
Despite the drop in sales, condo apartment rentals increased by 25.2% compared to Q2 2023, with 17,400 rentals reported through TRREB's MLS® System. Condo rental listings spiked by 51.3% year-over-year.
The increased supply of rental units has led to a slight decrease in average rents. One-bedroom condo apartments saw a 3.1% decline in average rent to $2,452, while two-bedroom units experienced a 1.9% decrease to $3,178.
Jason Mercer, chief market analyst at TRREB, cautioned that this rental relief might be temporary.
“While the increase in available inventory over the past year has resulted in slightly more affordable rents, it is important to understand that this relief could be short-lived if we don’t see a steady stream of new rental units coming online, both in terms of purpose-built rental and investor-owned condo rental units,” Mercer said in the report.
The average condo apartment selling price in Q2 2024 was $729,005, down 1.2% from $737,925 in Q2 2023. In the City of Toronto, the average selling price decreased by 0.5% to $765,963.
Mercer noted that despite the increased supply, prices have remained relatively stable.
"This suggests that sellers are holding relatively firm on their listing prices,” he said. “This may be in anticipation of improved market conditions as borrowing costs continue to trend lower this year and next."
Pearce expects the market to improve as affordability increases.
“The condo market is very sensitive to interest rates, given that this segment is a traditional entry point into homeownership,” Pearce added. “With monthly payments remaining high and average rents edging lower over the past year, many would-be buyers remain on the sidelines. However, over the next year, an improving affordability picture will see a growing number of first-time buyers enter the condo market.”
CMP
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