Canada’s resale real estate market has been booming during the pandemic, but not all real estate investors are benefiting. Condominium owners who rent out their units saw average monthly rents fall by 19 per cent annually, to $2,038 from $2,508, according to November figures compiled from properties listed on Rentals.ca. 

The company’s rent report, produced with Ben Myers of Bullpen Research & Consulting, says, “The downtown markets in Toronto and Vancouver have taken the biggest hits and like other metro rental markets are affected by the lack of immigration, fewer students renting and fewer new graduates renting their first properties – so demand is way down. But supply is way up, with former short-term rentals now being offered in the long-term rental market, and new unit completions on the rise.”

Myers says that “2020 has been the most unpredictable year of my nearly 20-year career as a housing analyst. It is unlikely that even the most bearish market watcher would have predicted a 20 per cent annual decline in average rents in the former city of Toronto. We expect the market to continue trending downward for the next four to six months nationally but start a slow recovery in the second half of 2021.

“For 2022, we believe the rental market will really take off, with double-digit rent growth in Vancouver and Toronto, and both markets will approach or surpass their fall 2019 market highs.”

The Toronto Regional Real Estate Board reported that active condo listings at the end of Q3 were more than double that reported the same time a year ago. Sales were up by 10.5 per cent as rock-bottom interest rates lured end-users into the market.

Renters leaving the downtown core included students moving home because classes were cancelled, international students making their way home to ride out the pandemic and move-up buyers, who used those low rates to relocate to a low-rise home or a larger condo. Sales of all types of properties in the suburban areas continued to be strong as buyers looked for more space.

“While there has been a recent surge in condominium listings, the historically starved Toronto condo market can withstand an increase in condo supply without significantly impacting price in the short term,” says Debra Harris, vice president of Royal LePage Real Estate Services in a company forecast.

“With the federal government’s new and aggressive immigration targets as well as the expected return of rental demand from university students in the fall, resale demand for condominiums should be significantly higher in the second half of the year.”

Harris says the young people who moved home to save money during the pandemic “will want to get back into the city when the vaccine becomes available. The question is whether consumer confidence in the condo market will be healthy, given the surge in listings.” But with more inventory and low interest rates, this may be an opportunity for some people to get into the market, she says.

John Pasalis, president of Realosophy Realty in Toronto and a well-known real estate commentator, isn’t so sure the recovery will happen quickly.

“Any return to the condo market will be tied to a return to the offices of the downtown financial district. Today, the financial district is a ghost town,” he says in a market report. “If people do not have to commute to the office, then there is no longer a need to move to a condo a five-minute walk away. Assuming Canada’s vaccine rollout goes as planned and the majority of Canadians are vaccinated by September, I still do not expect things to be ‘back to normal’.

He says the return to work in the office towers will be gradual “and I expect the return of the downtown condo rental market will also be gradual.

“That being said, the resale condo market may end up recovering faster than the rental market if investors jump back into the market in the months ahead. We are starting to see strong interest from investors looking for deals in the resale condo market. If this trend continues, condo investors rather than end users will set the floor on downtown condo prices.”

Meanwhile, for renters it’s a chance to take advantage of the market. In a report about purpose-built rental apartments, Research firm Urbanation says “most rental buildings surveyed were offering incentives to attract new tenants, which mainly included one month of free rent, move-in bonuses and, to a lesser extent, two months of free rent.”

In the Greater Toronto Area, a region with an acute housing shortage, 5,276 new rental units are scheduled for completion in 2021, the most in more than 25 years, says Urbanation.

For all types of properties, Rentals.ca says the average rent in Ontario during the last half of 2020 was $2,038, a decline of 12 per cent from a year ago. “But the average size of units listed declined by 14 per cent, as larger properties are snapped up by the work-from-home crowd, and the small downtown condos sit on the market.”