A surge of newly completed condos and purpose-built rentals has flooded the market, pushing average asking rents down to roughly $2,500 per month. According to a new national rental report from Rentals.ca and Urbanation, January rents in Toronto fell 4.5% year-over-year, marking one of the most renter-friendly moments in nearly four years.
That kind of drop is rare in Toronto — outside of the COVID period, rents almost never move meaningfully lower.
Too Many Condos, Too Few Buyers — And Renters Benefit
The core reason behind the decline is simple: supply shock.
Over the past two years, Toronto has seen record condo completions, many of them smaller units that were originally built for investors planning to sell. With resale demand weak and prices under pressure, many of those owners have pivoted to renting instead — adding thousands of units to an already crowded market.
The result?
More listings
Faster rent cuts
Less power for landlords
In many cases, condo owners are dropping rents aggressively just to secure a tenant, choosing cash flow over vacancy while waiting for the market to stabilize.
Developers Pivot to Rentals — And Incentives Are Back
It’s not just individual investors. Condo developers themselves are shifting strategies.
More than 6,000 purpose-built rental units were delivered in Toronto last year — the highest level in decades. Combined with condo overflow, this has flipped the rental dynamic almost overnight.
Landlords are now competing for tenants instead of the other way around.
Across the GTA:
Two months of free rent is becoming common
Gift cards and free internet are showing up in listings
Lease flexibility is back on the table
Just a couple of years ago, these incentives were unheard of.
Demand Is Softening at the Same Time
The supply surge is landing at a moment when demand isn’t keeping up.
Several factors are cooling renter pressure:
Slower population growth
Caps on international students
A weaker job market
Economic uncertainty making renters hesitant to commit long-term
When renters feel unsure about income stability, they’re less likely to stretch for premium rents — especially when options are everywhere.
Toronto Is Still Expensive — Just Less Extreme
Make no mistake: $2,500 a month is still expensive for most households.
Toronto remains the second-most expensive rental market in Canada, behind only Vancouver. Larger units — especially three-bedroom and family-sized rentals — are still in tight supply, and truly affordable housing remains scarce.
What’s changing isn’t affordability overnight — it’s momentum.
Rents are easing off pandemic-era highs and drifting closer to reality.
What This Means for Owners, Investors, and Borrowers
This shift matters beyond renters.
For condo owners and investors:
Cash flow assumptions are changing
Vacancy risk is real
Carrying costs matter more than appreciation right now
For many property owners, equity-based solutions are becoming more relevant — whether that’s refinancing, restructuring debt, or accessing short-term private capital to stabilize a property during a softer market.
At Lendworth, we’re seeing more real estate owners use private mortgage solutions to bridge uncertainty — not panic-sell assets.
The Bottom Line
Toronto’s condo slowdown isn’t just a headline — it’s reshaping the rental market in real time.
Renters finally have options.
Landlords are negotiating again.
And investors are being forced to adapt.
If you own property, are navigating changing cash flow, or need flexible financing while the market recalibrates, Lendworth can help you make smart, equity-driven decisions — without waiting on bank approvals.
📞 Call 905-597-1225 to speak directly with a private lending expert today..