Is the Rental Market in Toronto Still in Trouble?

The last time we did a rental market update was back in mid-February and we focused on the core downtown Toronto areas, C01 and C08.

Despite all the immigration cuts and softening demand, the number of units leased during the first 1.5 months of 2025 was actually slightly more than the same period in 2024.

But, there was a catch.

Inventory had doubled.

We were sitting at 4.4 months of rental inventory in downtown condos.

Let me put that into perspective for you.

Toronto has long been known for its competitive rental market and high rents, that happens when inventory hovers around just one month.

At that level, if no new listing came online, every available unit would be leased within a month.

What about during the worst time?

During the Covid rental crisis, our rental inventory level peaked at around 5 to 6 months.

You see, when we saw 4.4 months of inventory back in February, that was very high.

Now that we’re halfway through 2025…

Did the rental market recover?

Or has it gotten worse? If you’re interested in getting rental insights, make sure you subscribe and hit the bell now.

I’m going to focus on data from C01 and C08, the core downtown areas because they are the most representative when it comes to condo rentals.

We’re going to look at the period from January 1 to July 15.

In 2024, during that timeframe, 14,069 units were leased.

In the rental peak year of 2021, the number was 15,717 units.

What about this year?

15,829 units leased.

That’s even higher than in 2021.

So in terms of rental activity, we’re doing great.

But what about inventory?

The number of pre-construction completions continues to be a concern due to the surge in rental supply.

Right now, there are 3,121 units available for rent in the downtown core.

Let’s look at how many units were leased over the past 30 days.

3,371 units.

That means, at the current pace, we have just 0.9 months of inventory, which signals a very tight rental market.

If you are a landlord, this is the best time to find a tenant.

If you have a vacant unit on hand and you’re debating whether to rent or sell, I strongly recommend rental over a sale in today’s market.

We’re now in July, the peak of the rental season.

If this strong momentum continues for a few more months, rents will stabilize and could even start trending up again. 

Let’s look at how rents have changed since the beginning of 2024.

Studios were leasing above $2,000, now they’re around $1,800 to $1,900.

1 Bedrooms dropped from $2,300 to roughly $2,000 to $2,100.

1+Den units are now around $2,300 to $2,400.

2 Bedrooms have come down from $3,000 to around $2,700.

That’s roughly a 10% drop in rents.

But here’s the thing.

Despite the dip in rent prices, rental demand is surging, and inventory is being absorbed at a strong pace.

And that’s an important signal.

Because strong rental activity is often one of the first signs of a market recovery.

It means more renters are returning, vacancy is tightening and confidence is building from the group up.

So unless you absolutely need to sell, this is the time to hold your property and rent it out.

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