The cost of renting has been rising in Toronto. There has been steady growth in average rents due to demand from tenants and landlords, resulting in extremely low vacancy rates of 1.1% for all rentals in the city, and a meagre 0.7% for condo apartment rentals in particular.
Data from the Toronto Real Estate Board’s Rental Report shows that in the third quarter of this year, the average one-bedroom condo apartment rental unit in Toronto went for $2,262, a rise of 4.5%, and the average price of a two-bedroom rental increased by 4.2% to $2,941.
Increasing Rent Prices Are Quite Troublesome for Toronto Home Seekers
Decreasing affordability in the rental market is placing considerable financial strain on prospective renters; in 2017, after news reports of rent prices doubling, rent controls were implemented by the former Ontario government which restricted the yearly increases on lease renewals for buildings constructed before November 15, 2018 to the rate which was set by the province. However, rentals built after that date do not have the same restrictions.
According to a recent survey conducted by Zoocasa, most renters said that they had been negatively affected by increasing home costs, with 76% reporting that it had negatively impacted their mental health at least once in the past year.
Comparing the Cost of Rent to Condo Ownership in Toronto
But how do rent costs measure up when compared to those of owning a home across Toronto? Zoocasa compared the average cost of a condo apartment rental with sold prices for condos in 35 neighbourhoods in the city. The minimum down payment required to buy the average condo unit in each neighbourhood, and the number of months of rent equivalent to the amount of the down payment, were calculated for the study. The data for the average condo apartment sold prices and the monthly lease rates for Q3 2019 was sourced from the Toronto Real Estate Board.
The locations in the city where it would take the least and most time to save for a condo down payment if buyers did not have to pay rental costs – a possibility for the 47.4% of young adults in Toronto who live in the family home – were revealed in the study’s findings.
The numbers also offer insight into the average minimum financial commitment necessary to rent or enter into the housing market in each of the neighbourhoods. The findings highlight the fact that in neighbourhoods where the rent is particularly high, the cost of rent may act as a hinderance for those considering homeownership. An example of this is the fact that throughout the city, the average renter would have to save the equivalent of 14.7 months of rent in order to have the minimum down payment of $37,807 to buy average condo unit at $628,074.
However, according to the study, there is a silver lining for prospective home buyers as there are 13 neighbourhoods in which it is possible to save the minimum down payment within a year if no rental payments are made during that time. These neighbourhoods which include West Hill, Centennial Scarborough, Malvern, Rouge, Black Creek and Rexdale, are located on both the eastern and western edges of the city, away from the downtown core.
It would take between 13-24 months to save for a down payment in a total of 19 neighbourhoods, while it would take greater than 25 months in three others. The most expensive neighbourhoods which are predominantly located around midtown, include North York condos as well as properties further to the south, like condos in downtown Toronto. This encompasses neighbourhoods like Rosedale-Moore Park, Yorkville and York Mills, which have a number of walkable amenities in close proximity as well as access to major highways and public transit.
Take a look at the infographic below to see how months of rent compare to minimum down payment amounts in neighbourhoods across Toronto:
Zoocasa is a full-service brokerage that offers advanced online search tools to empower Canadians with the data and expertise they need to make more successful real estate decisions. View real estate listings at zoocasa.com or download our free iOS app.