Data on Toronto’s 2016 market
Torontonians who rent units in the city should expect a growth in prices this year. Rental prices for an average Toronto 1-bedroom apartment unit grew from $1,657 in 2015 to $1,777 in 2016. 75% of rental units in Toronto available to lease were occupied in 2016, compared to 65% in 2015. Source: TREB Rental Market Report, Q3 2016 This 10% increase means that more people need to rent in a market that has fewer units to rent out each year. Rental prices increase, on average, anywhere between $75 to 100+ a year for 1-bedroom units. This means that by early 2018, renting a 1-bedroom apartment could cost around $1,900 to $2,000+. Upkeep expenses also contribute to the rise in rental prices; landlords normally pass on property tax costs to renters.
Sources: Stats Canada, TREB, and in-house calculations ** actual figure currently unavailable, but this is our estimate (based on past trends)
Perspectives on Toronto’s future rental market
While the growth in rental prices are small compared to more expensive markets (think New York or London), Toronto could use more purpose-built rental units. In a market where some tenants resort to bidding wars, landlords cash in on increasing demand. Young Torontonians between the ages of 18-30 and recent immigrants to Canada are increasingly unable to afford mortgages. These consumer groups are always in supply, so property developers should set their sights on building more rental communities. Real estate market research consultant Shaun Hildebrand from Urbanation has this to say about Toronto’s market: “While less pressure on rent growth may arrive in 2017 due to a temporary rise in new apartment completions, it’s become clear that more attention needs to be paid to building rentals over the longer-term.”
What renters can do in the meantime
Share a place
If you know someone (such as a significant other, sibling, friend, etc.) considering a move to the city, seek out a larger unit and consider sharing rooms or a unit.
- A young couple wants to move-in together and make plans to share a two-bedroom unit in the Yonge-Eglinton area
- Once budgeting for other expenses, the couple agrees that they can each afford a maximum of $1,300 each (utilities included) for their housing
- After an extensive search, they find a place for just under $2,350 with utilities, having ~$200 to spare for other expenses
Depending on your needs, affording housing costs becomes fairly easy between roommates.
Consider taking public transit (if you own a car)
Parking fees add to the high expenses of living downtown. If your place of work or school is within reasonable distance of taking a bus or train, consider using public transportation. Doing this saves thousands of Torontonians hundreds of dollars in maintenance costs associated with car ownership.
- At current TTC fare rates, buying a 12-month Metropass subscription costs an adult Toronto resident $1,608 a year
- On average, Ontarians paid $1,920 in 2016 for auto insurance, plus varied fuel, parking, auto loan payments. For Toronto residents, keeping up with car maintenance costs can swell into $6,000 or more a year.
Sources: TTC.ca and InsureEye.com Selling your car allows you to apply savings towards saving for a down payment or moving into a better apartment.
Prepay your rent (if possible)
If you have the means to do so, budget your finances to pay a couple months’ rental fees in advance. In-demand units get rented to tenants who pay 4, 6, or 8 months’-worth of rent (via post-dated cheques or wire transfer) upfront – especially in Toronto. Landlords sometimes offer discounts or incentives to tenants who pay lump sum rental fees. Paying in advance also gives renters peace-of-mind not to worry about housing insecurity.