In late 2024, the government announced an aggressive cut on temporary residents.
The number of work visas and student permits are significantly reduced.
Most of us were expecting to see an immediate impact on the rental market.
Now that we are 1.5 months into 2025, has the market actually shifted?
Today, we are diving deep into the downtown Toronto rental market, specifically C01 and C08.
Because these are the core areas where most temporary residents settle.
You have probably already heard from social media or friends that the rental market is tough and rents are coming down.
How bad is it?
How many units are actually getting leased?
How much have rents dropped?
How long does it take to rent out a unit in the current market?
I’m going to answer all that in today’s episode.
In this previous episode, we saw that the rental market in 2024 was actually very busy.
The number of units leased was almost the same as the red hot year of 2021.
But the market just felt sluggish because there was a lot of rental inventory from new condo completions.
During the first 1.5 months of 2024, there were 2,279 units leased in downtown Toronto.
What about the first 1.5 months of 2025?
More or less?
Surprisingly, 2,597 units were leased, around 14% more than 2024.
Let’s take a look at the distribution of the different unit types.
There were 132 studio units leased during the first 1.5 months of 2024.
In 2025, the number jumped to 201.
That’s interesting, you will see why later on in this video.
For 1 Bedroom, 136 more units were leased in 2025.
For large unit types, the increase in 2025 is less significant.
Now, let’s take a look at the median rent for the different unit types.
In 2024, the median rent for studios is $2,025.
In 2025, it dropped to $1,850, which is $175 less than 2024.
This is the reason why studios are getting more popular in 2025 because they are significantly cheaper than 2024.
We are seeing an almost 9% drop in rent and it is below that $2,000 mark.
What about 1 bedroom units?
We are also seeing a big 7% drop in rent, from $2,150 to $2,000.
The price drop in larger units is relatively less significant.
1+Den units saw a 4% drop to around $2,250.
2 Bedroom units saw a 5% drop to around $2,700.
3 Bedroom, 6% drop to around $3,800.
Here’s the big question.
If we are actually seeing more units getting leased in 2025, then why are rents dropping?
In 2024, there were around 4,000 units available for rent in downtown Toronto during the first 1.5 months.
In 2025, the number jumped to 7,000.
Tenants have a lot more selections and that’s exactly why rents are dropping.
Where does all this rental supply come from?
There are 3 main sources.
One is from new condo completions.
Two, some units are becoming vacant because the existing tenants have to leave the country.
We had tenants who went back to their home countries because they couldn't renew their work visas.
The third source comes from landlords who tried to sell their unit.
We have a lot of landlords who tried to sell their units but couldn’t get the price they wanted.
Now that interest rates are coming down, they have decided to put the unit back to the rental market instead, further adding to the supply.
And yes, with more supply, it is going to take longer to get your unit rented.
Last year, 1 bedroom units were typically rented in 15 days, with other units taking around 22 days.
This year, it is going to take roughly a month to get any type of units rented, so keep that in mind if you are looking for a tenant.
Here’s the thing.
The current rental market has created a new challenge for landlords doing lease renewals with their existing tenants.
Tenants are well aware that rents are coming down.
So they often ask for rent reduction when it comes to lease renewal.
I have agreed to reduce the rent for a few of my own units already, typically around $100 to $150.
It makes more sense to keep the tenant instead of finding a new one, if the market rent is lower anyway.
Of course, tenants are taking advantage of a wider selection with lower rents, so some of them are just switching to different units.
You see, transactions were created from existing tenants moving to different units.
This is one reason why we saw more units leased this year even with a reduction in temporary residents.
So, what’s the final takeaway from this rental market update?
There’s definitely an impact on the rental market from the government’s immigration cuts.
We are seeing rent reductions across all unit types and it is taking longer to secure a tenant.
But is it as bad as some people feared?
Not really.
In fact, more units were leased this year compared to the same period last year.
Yes, tenants have more options and landlords need to price their units competitively.
But if you price it right, you can still get your unit rented within a month.
And the good news is savings from decreasing interest rates are often more than offset the rent reductions.
If it is not a must for you to sell now, I definitely recommend keeping your unit rented for a couple more years.
If you must sell, I’m going to show you what type of unit would attract multiple offers even in today’s market in next week’s episode, make sure you subscribe and hit the bell now so you won’t miss it!
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