Over the past few weeks, I’ve spoken with several small builders in Toronto who are weighing whether to move forward with new multiplex projects. One of the key challenges they’re grappling with is reconciling the desire to add much-needed rental supply with the reality that average rents across the GTA are declining.
But the problem with using citywide rent averages to make decisions is that they obscure the true story.
Toronto’s rental market isn’t moving in lockstep. There are significant differences in rent performance depending on geography, housing type, and even unit size. In other words, what’s happening with micro condos in the suburbs is not what’s happening with large family-sized homes in the city.
To illustrate this, I looked at average rents in the City of Toronto (not the GTA) and broke them down into more meaningful categories:
- Small condo units (500–599 sq ft)
- Large condo units (1200–1399 sq ft)
- Three-bedroom low-rise homes (detached and semis - using bedrooms rather than square footage, due to MLS data limitations)
I then compared how average rents for each category have changed over two key periods: from May 2019 to May 2025, and from the peak in August 2023 to today.
Here’s what the data shows:
- Over the past six years, small condos have seen the weakest rent growth - up just 7%. By contrast, large condos are up 19%, and three-bedroom homes are up 20%.
- Since the August 2023 peak, rents for small condos are down 13%, while large condos are down 7% and three-bedroom homes are down just 4%.
These numbers paint a clear picture: demand - and pricing power - has been far more resilient for larger, family-sized rentals.
This divergence is a direct consequence of policy failure. For years, Ontario’s housing strategy prioritized the rapid production of micro condos, fuelled by speculative investor demand, while neglecting the creation of family-oriented housing. The result is a surplus of tiny units with softening rents and a shortage of larger homes where rental demand remains strong.
For builders planning new multiplexes today, this cross-sectional view of the market is critical. Projects that meet the needs of families—particularly in the form of well-designed, larger units in central locations—are likely to remain more stable, even as smaller rental units face downward pressure.
In the years ahead, I expect this trend to continue: rents for family-sized homes will remain resilient, while oversupplied micro-units will see further declines. Builders and policymakers alike would be wise to take note.
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
June 18, 2025
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