After years of relentless increases that pushed many to the financial brink, Toronto’s rental market is experiencing what some analysts are calling a meaningful correction. New data from the Toronto Regional Real Estate Board shows average rental prices have declined 7.3% year-over-year, marking the third consecutive quarter of decreases in Canada’s largest city.
“What we’re witnessing isn’t just a temporary blip but potentially a recalibration of Toronto’s rental ecosystem,” says urban economist Priya Sharma. “The combination of increased housing supply, shifted work patterns, and government interventions has created downward pressure on prices not seen in over a decade.”
The most significant drops are occurring in the downtown core, where one-bedroom apartments have fallen from an average of $2,650 in early 2024 to approximately $2,350 currently. Two-bedroom units have seen even steeper declines, now averaging $3,100 compared to $3,500 this time last year.
For Torontonians like Marcus Chen, who recently negotiated his rent down by $200 monthly, the shift is welcome but hardly revolutionary. “It’s nice to have a bit more breathing room, but let’s be honest—rent is still crushingly expensive compared to most cities,” Chen told CO24 News. “I’m saving enough to maybe take an extra vacation, not enough to suddenly build wealth.”
The causes behind this rental reprieve are multifaceted. The completion of several major residential developments has injected nearly 15,000 new units into the market over the past 18 months. Meanwhile, changes to short-term rental regulations have converted thousands of former Airbnb properties back into traditional long-term rentals, according to data from the City of Toronto’s housing secretariat.
Ontario’s housing minister Cameron Foster points to provincial policy as a contributing factor. “Our government’s initiatives to cut red tape for developers and expedite building permits are beginning to bear fruit,” Foster said during a press conference on housing affordability. Critics, however, note that many of the completed projects were approved long before the current administration took office.
The impact of this rental decline varies dramatically across demographic groups. Young professionals who previously allocated upwards of 50% of their income to housing report modest improvement in their financial situations. For lower-income residents, however, the changes have been less transformative.
“A 7% decrease doesn’t meaningfully change the math for someone earning minimum wage,” explains housing advocate Desiree Williams from the Toronto Housing Coalition. “We’re still facing a fundamental affordability crisis where housing costs remain disconnected from local incomes.”
Landlords are responding to the changing market conditions in varied ways. Some are offering incentives like free months of rent or upgraded amenities to attract tenants, while others are converting rental properties back to the sales market to capitalize on still-robust home prices.
The question remains whether this trend represents a temporary adjustment or the beginning of a longer-term rebalancing in Toronto’s notoriously expensive housing market. Economists at major Canadian banks remain divided, with projections ranging from further 5-8% declines over the next year to a potential stabilization by late summer.
For many Torontonians who have struggled with housing costs for years, the central question isn’t statistical but personal: Has this rental decline meaningfully improved your living situation? CO24 Business wants to hear from tenants and landlords alike about how these changing market dynamics are affecting your daily reality in what remains one of North America’s most expensive cities.
