Things to Know Before Renting in 2025
As Toronto's rental market cools, student renters in Toronto finally gain bargaining power after years of soaring prices. This shift offers not only fairer rental prices, but also the opportunity to negotiate better terms for the new year.
By: Sophie Shen
Source: CBC News
As the end of the semester approaches, you might find yourself in a position like myself—preparing to negotiate with my landlord to reduce rent. Rental prices across Toronto are dropping as the market corrects itself from the overheated post-pandemic years. With the market cooling down significantly, the bargaining power may finally rest in the hands of the renters for the first time in years.
Overall, the Toronto rental prices dropped an estimate of 9.4% in 2024. According to a report published by Rentals.ca, the average rent in November was $1,932 for a bachelor (a 7% drop from the year prior); $3,115 for a two-bedroom (10% drop); and $3,710 for a three-bedroom (6% drop). Prices hit a 17-month low in December 2024, indicating hopeful prospects for students to find affordable rental properties.
What caused this overheated housing market? A combination of factors drove the shelter inflation in early 2021. Rental demand largely depends on the population of the city, therefore when Toronto experienced an influx of population post-Covid the demand quickly bidded up rental price. People were moving back into the metropolitan to return to work, immigration increased, and the economy was quickly recovering from the covid-shock. Interest rates, including mortgage rates, were low, further driving the demand for housing and rentals. However, demand-pull inflation was not the main perpetrator of the overheated market. As inflation rates dropped from 8.1% in June 2022, to record low of 2.8% in 2023, the housing and rental market unusually did not follow the same trend.
Source: Toronto Regional Real Estate Board’s MLS system
The shortage of supply caused rental prices to remain high for so long. Developers were not able to match rental completion to demand as post-pandemic construction delays strained the number of available units. The lack of vacant rental units drove up the prices and ultimately posed affordability challenges for a third of all households in Toronto. The number of available low-income households was even more scarce.
When developers finally put properties on the market, they were overpriced and stayed unsold for months. In 2024, new condo sales were the lowest since 1996; in fact only 802 units were sold in the fourth quarter of 2024. Urbanation reports “Six projects totaling 1,829 units launched for presales during Q4-2024, of which only 10% of units.” This period marked the price lag when demand has cooled while supply has not yet adjusted.
However in 2025, rental prices have appropriately lowered. Several new condo units are scheduled to be completed in 2025, accommodating for the predicted 2-4% future growth in rental units this year. This may be an indication for future rent stabilization for students in downtown Toronto. Although prices may still remain relatively high in areas close to institutions such as University of Toronto and Toronto Metropolitan University, the cooling market most-importantly brings potential negotiation power when it comes to rent, upfront payment terms, and leasing terms. Hopefully the trend continues when I sit down with my landlord this spring and bid down the price of my ridiculous $3300 apartment.
Finding affordable housing in Toronto is challenging and stressful especially for first-time renters. However, being well-informed in your housing search may help you avoid certain traps and scams that come with this volatile and fast-paced market.