Toronto condo rents soar to an average just under $3,000 a month — even ‘micro’ apartments going for $2,100

Market research firm Urbanation finds a nearly 32 per cent rise in rent for condominiums over the last two years. “It’s alarming as this growth is occurring off of record highs from a year ago,” said company president Shaun Hildebrand.

Rents for GTA condos continue to soar, hitting an average of about $2,800 a month in the second quarter of 2023, according to market research firm Urbanation.

That’s about $4 a square foot — an almost 32 per cent rise over the last two years. And the spike in rents has been even higher for micro units under 400 square feet.

“I’d say it’s alarming as this growth is occurring off of record highs from a year ago,” said Shaun Hildebrand, president of Urbanation. “There is a point where, and I think we’ve already reached that, the market becomes unaffordable and you start to see some resistance, and unfortunately the only relief valve is from people leaving the city.”

The vacancy rate for purpose-built rental buildings is up slightly from 1.5 per cent a year ago to 1.9 per cent, but still very low.

Hildebrand blames sky-high rents on a “confluence of factors” including a strong job market, rising interest rates, high home prices that shut out first-time buyers, and immigration. As well, more people are doubling- and tripling-up with roommates to be able to afford more.

If tenants want to live alone, they’re going to be shelling out for even the smallest spaces. Micro condos had the highest annual rent growth, of 15 per cent in the second quarter of this year, with an average rent of $2,121.

“I think this is a direct correlation with just how expensive the market has become,” said Hildebrand. “There really isn’t anything that runs for under $2,000 a month anymore.”

This is “catching the eye of developers” he said, who have “pulled back” on building new purpose-built rentals because of high costs and interest rates.

Apartments too small for a child — or even a pet

Meanwhile they can build more micro units — too small for a child or even a pet — for a higher price per square foot. This does result in more supply, “but on the other hand,” said Hildebrand “is it really the type of supply that we need for the long term?”

There were 17,542 new condo units registered during the 12 months ending in June 2023, and nearly 37 per cent were rented through the real estate board, up from 31 per cent at the same time last year.

This suggests, said Hildebrand, that despite some investors losing money due to rising mortgage payments, some are hanging on as a “long-term investment.”

Dania Majid, a staff lawyer for Advocacy Centre for Tenants Ontario (ACTO) said these new rent numbers are “part of the continuing trend of rent skyrocketing and wages not keeping up with these major increases.”

What happens in this environment is that tenants become “house poor” spending more than 50 per cent of their income a month on rent with little left over for basic necessities. They also end up taking on “peculiar” arrangements like staying in the same place as a partner after they’ve broken up, or dividing a one-bedroom among three roommates.

She noted that condos built after 2018 are not subject to rent control in the province, meaning that in the new towers going up “fast and furious” across the GTA tenants can be “economically evicted,” through huge yearly rent hikes.

The move toward smaller units, she said, reflects that despite the fact that condos make up a big chunk of the rental stock in the region, they are increasingly not a place to raise a family or live long-term.

“They are a place to park money and get a really high return on that money,” she said.

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