The Toronto Regional Real Estate Board (TRREB) published two Market Reports this morning, providing overviews on key takeaways from the fourth quarter of 2023 in Toronto’s condo and rental apartment markets, revealing significant trends shaped by factors including population growth and borrowing costs.

While the rental market report indicates a notable increase in rental activity in a tight market, the condo market report shows that condominium sales saw decreased activity and greater supply, but with signs of sales improvement anticipated later this year.

Looking north to construction on Yonge Street, image by UrbanToronto Forum contributor mburrrrr

In the rental apartment sector, the market experienced a notable surge in activity. Total rental transactions for apartments rose by 12.6% year-over-year, reaching 9,745 transactions. Concurrently, there was a significant 46% increase in rental listings, providing more options for renters. This influx of available properties slightly tempered the pace of rent increases, with average rents for one-bedroom units growing by 2.2% to $2,552 and two-bedroom units by 3.7% to $3,267.

TRREB President Jennifer Pearce highlighted the strong rental demand, driven by population growth and elevated borrowing costs affecting potential homeowners. She pointed to factors such as "immigration and non-permanent migration into the Greater Toronto Area," while noting that "over the same period, elevated borrowing costs presented affordability challenges for would-be home buyers. While many current renters may ultimately become first-time buyers, a large proportion will need to see lower borrowing costs before they commit to purchasing a home."

TRREB's Chief Market Analyst, Jason Mercer, highlighted the persisting tightness in the rental market but acknowledged the temporary slowdown in rent growth due to increased listings. He advised that "this is expected to continue for the foreseeable future given the expected pace of population growth. However, the condominium apartment rental market in the region did benefit from a welcome growth in listing supply in the second half of 2023."

Concurrently, the condo sales market experienced a slight downturn. Sales decreased by 3.4% year-over-year, totalling 3,446 transactions. However, this was accompanied by a substantial 29% increase in new condominium listings, indicating a shift towards a more balanced market. Reflecting these dynamics, the average selling price of condominium apartments across the GTA dipped by 1.1% to $702,142 — with a more pronounced 2.4% decrease in the City of Toronto itself to an average of $720,456.

Pearce emphasized the impact of the Bank of Canada's interest rate hikes since early 2022. Looking ahead, she noted "borrowing costs are expected to trend lower this year and next. This will improve the affordability picture for many first-time buyers, so the condo market is poised for improvement in 2024."

Mercer added that the high average rents and anticipated decreases in borrowing costs might encourage more households to shift from renting to buying, particularly in the condo segment. He predicts that “as we move through 2024, demand for condominium apartments should pick up. Expected decreases in borrowing costs coupled with high average rents could prompt more households to purchase a home over the next year."

These sakes and rental market reports collectively paint a dynamic picture of transitioning real estate markets in the GTA, marked by unique and evolving demands in both the rental and ownership sectors.

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UrbanToronto has a research service, UrbanToronto Pro, that provides comprehensive data on construction projects in the Greater Toronto Area—from proposal through to completion. We also offer Instant Reports, downloadable snapshots based on location, and a daily subscription newsletter, New Development Insider, that tracks projects from initial application.