Toronto's Rental Market Experiences Temporary Surplus as Condo Supply Peaks
Toronto's rental landscape has shifted dramatically in recent months, creating what experts describe as a temporary renter's market. A record glut of condominiums and apartments has collided with increased rental construction, offering tenants more choices and better negotiating power than they've seen in years.
Unprecedented Supply Creates Renter Opportunities
According to data from Urbanation Inc., which tracks rental statistics across the Greater Toronto and Hamilton Area, rental starts surged by 42 percent in 2025 compared to the previous year. This represents the highest annual level seen since the 1970s. Meanwhile, rental buildings under construction increased by 77 percent compared to five years ago, with 6,379 rental units completed in 2025 alone—marking a 40-year high for completions.
"I'd say to any renter, take advantage of this market, because it's not going to last," cautioned Shaun Hildebrand, president of Urbanation Inc. "It's rare for rents to decline in Toronto over a sustained period." He noted that such declines have only occurred a few times in the past two to three decades, including during the COVID-19 pandemic and the current market conditions.
Market Dynamics Shift as Vacancies Rise and Rents Fall
The unprecedented supply has led to higher vacancy rates across the city, with average rents falling approximately 10 percent from their peak in the third quarter of 2023. Despite this decline, prices remain elevated by historical standards. The average rent currently sits at nearly $3,000 for 720 square feet of living space—still 16 percent higher than five years ago.
To attract tenants in this competitive environment, landlords have significantly increased their incentive offerings. "Pretty much any building that's been completed the last couple of years is offering incentives," Hildebrand explained. "Most of them are doing two months' free rent right now, which represents a substantial discount over a standard 12-month lease."
Creative Incentives and Market Competition
Beyond free rent periods, property owners are deploying various strategies to fill vacancies. These include gift cards, cash moving bonuses, complimentary internet services, reduced rates on parking and locker rentals, and promises of no rent increases for specified periods. These incentives reflect the heightened competition in a market where condominium rentals—typically owned by individual investors with mortgages—often offer cheaper alternatives to purpose-built rental buildings.
Urbanation's research reveals an interesting trend: between 2024 and 2025, tenants increasingly moved from one condo to another cheaper unit. "There's been a lot of downshifting in the market toward cheaper units," Hildebrand observed. The data shows lease transaction volume more than tripled for units renting under $2,000 monthly and more than doubled for those between $2,000 and $2,200 monthly.
Temporary Conditions with Looming Supply Concerns
Despite current advantages for renters, experts warn these favorable conditions are time-sensitive. Urbanation projects that by 2029, condo construction in the GTHA will slow to nearly zero, creating a significant supply crunch for the rental market. This projection is particularly concerning given that condominiums constitute nearly 80 percent of Toronto's rental housing stock.
The current market represents a unique window where supply has temporarily outpaced demand, but demographic pressures and construction timelines suggest this equilibrium won't persist. As Hildebrand emphasized, the dynamics currently benefiting renters are exceptional and unlikely to extend beyond the short term, making immediate action advantageous for those seeking rental accommodations in Canada's largest city.
