Troubling Times For Landlords And Investors

Apartment vacancy rates in Toronto hit a high high in 2020, reaching 5.7%. As a point of reference, the vacancy rate was only 1.1% at the end of 2019. All this occurred as a record number of new condo units were completed and Airbnb hosts were also forced to put their units back on the market as long-term rentals as the tourism pipeline dried up. The lustre of urban living has definitely been tarnished.

Demand has been weakened by the pandemic, business closures, office workers who lost their jobs were forced to give up their rental units, and university students returning home and learning online.

There are 15 rental buildings slated for completion in 2021 with a total of 4,977 new units expected to come onto the market on top of the current supply – the most to come online since 1993.

There are great deals out there for prospective condo buyers, and lots of inventory, but these are also troubling times for landlords and inventors trying to cover their costs.

The sudden over-supply combined with reduced demand caused rent prices in Toronto condos and apartments combined to drop, on average, by 17%. Toronto condos alone fell by 14% year-over-year. This sharp decline means that a $2,500 pre-pandemic apartment would now be fetching a mere $2,075.

This 5.7% vacancy rate is the highest level the federal housing agency has recorded in 50 years. To put this into context, vacancies in the city have been consistently less than 2% for nearly the last decade.