Toronto’s rental market remains highly active, with demand for condominium rentals continuing to surge.
In February 2025, the number of leased condo units increased by 13% year over year and sits nearly 50% above the five-year average for this time of year. However, despite strong rental demand, rents are on a downward trend as supply growth outpaces leasing activity.
One of the key factors driving rental demand is the prolonged slowdown in the resale housing market. Historically, the Toronto area sees about 90,000 home and condo sales per year, but for the past two years, sales have slumped to roughly 65,000 annually. This steep decline doesn’t indicate a drop in housing needs—it simply reflects that more people can’t afford to buy, forcing them to remain in the rental market. In this way, Toronto’s soft resale market has directly fueled rental demand.
Yet, despite robust leasing activity, average condo rents continue to decline due to a surge in available listings. In February, nearly 10,000 condominiums were available for rent—more than double the typical inventory for this time of year, which usually sits at around 4,000 units.
As a result, condo rents have fallen 4% year over year and are down 12% from their peak in August 2023.
Looking ahead, several factors will determine how Toronto’s rental market evolves:
- Federal immigration policy: A sharp reduction in the number of non-permanent residents in Canada, as planned by the federal government, could lead to a decline in rental demand over the next 12–24 months.
- Resale market trends: As long as home sales remain muted, rental demand is likely to stay elevated. However, if buyer confidence returns and sales pick up, fewer people will need to rent, cooling demand.
- New condo supply: Toronto still has a large pipeline of new condo units, many of which were purchased by investors with plans to rent them out. The key question is whether demand will be strong enough to absorb this growing supply.
For now, Toronto’s rental market remains in flux. While demand remains strong, falling rents signal a shift as more rental units flood the market. The balance between supply and demand in the coming months will determine whether this trend continues—or if a new dynamic takes hold.
John Pasalis is President of Realosophy Realty. A specialist in real estate data analysis, John’s research focuses on unlocking micro trends in the Greater Toronto Area real estate market. His research has been utilized by the Bank of Canada, the Canadian Mortgage and Housing Corporation (CMHC) and the International Monetary Fund (IMF).
Have questions about your own moves in the Toronto area as a buyer, seller, investor or renter? Book a no-obligation consult with John and his team at a Realosophy here: https://www.movesmartly.com/meetjohn
