Toronto’s real estate market is being reshaped by surging rental demand and significant population growth, two factors driving both housing prices and market activity in 2024.
As Canada’s largest city continues to attract new residents, the rental market is thriving, creating ripple effects across the housing sector.
In November 2024, the average monthly rent for a one-bedroom apartment in Toronto rose to $2,750, reflecting a 6.4% year-over-year increase.
Meanwhile, the city’s population growth—driven by immigration and job opportunities—has intensified the need for housing across all segments, from rentals to sales.
The Numbers: Key Insights from November 2024
- Rental market growth: The average monthly rent for a two-bedroom unit rose to $3,400, a 5.8% year-over-year increase.
- Vacancy rates: Toronto’s rental vacancy rate dropped to 1.7%, one of the lowest levels in recent years, highlighting the intense demand for rental properties.
- Population growth: The GTA added over 120,000 new residents in 2024, with immigration accounting for the majority of the increase.
Why Rental Demand Is Soaring
- Affordability Challenges in Homeownership
With the average price of a detached home reaching $1.46 million and semi-detached homes at $1.12 million, many prospective buyers are opting to rent instead. High mortgage rates and rising home prices have made renting the more affordable option for a large segment of the population. - Increased Immigration
Toronto’s role as a hub for newcomers has fueled rental demand. Many immigrants, who accounted for over 75% of GTA’s population growth in 2024, begin their housing journey in rental properties while they establish financial stability. - Job Growth in the GTA
The GTA continues to create jobs in sectors like tech, finance, and healthcare, attracting professionals from across Canada and abroad. These workers often prefer rental properties near their workplaces, particularly in downtown Toronto and transit-accessible areas.
Case Study: A Landlord’s Perspective
Tom, a landlord in Midtown Toronto, has experienced the effects of rising rental demand firsthand. In November 2024, he listed his one-bedroom condo for rent at $2,900 per month, a 10% increase from the previous year. Within 48 hours, he received multiple applications, including offers above the asking price.
For Tom, the current rental market is an ideal environment to maximize income while maintaining high occupancy rates.
“It’s never been easier to find tenants,” he noted, reflecting the benefits landlords are experiencing in today’s competitive rental market.
Impact on Homebuyers
The surging rental market is indirectly influencing homebuyers in several ways:
- Increased Competition for Investment Properties
Investors are capitalizing on rental demand, purchasing condos and semi-detached homes to generate income. This has added competition for buyers seeking homes for personal use, particularly in high-demand areas. - Higher Rental Costs vs. Buying
For some renters, the rising cost of renting is making homeownership more appealing. Buyers who can afford the upfront costs are increasingly viewing homeownership as a way to build equity rather than spending on high monthly rents. - Shifting Preferences
Young professionals and families are considering suburban areas like Milton and Pickering, where rental prices are lower, and the prospect of owning a home is more achievable.
For Renters: Navigating a Tight Market
Renters in Toronto face several challenges in today’s rental market, but there are ways to navigate the competition:
- Be Prepared
With vacancy rates at 1.7%, securing a rental requires quick decision-making. Renters should have their applications ready, including proof of income, credit checks, and references. - Expand the Search Radius
Exploring neighborhoods outside the downtown core, such as Etobicoke or Scarborough, can yield more affordable options without sacrificing access to amenities. - Negotiate Long-Term Leases
Locking in a long-term lease can help renters avoid frequent rent increases, providing financial stability in a rising market.
For Landlords: Maximizing Opportunities
Landlords are in a strong position to capitalize on the booming rental market, but strategic management is key:
- Set Competitive Rents
While demand is high, setting rents slightly below market rates can attract reliable tenants quickly, reducing vacancy periods. - Maintain the Property
Well-maintained properties not only command higher rents but also attract quality tenants. Regular upkeep and small upgrades, such as modern appliances or fresh paint, can make a significant difference. - Leverage Professional Services
Hiring property managers or leasing agents can streamline the rental process, ensuring landlords find trustworthy tenants while minimizing administrative work.
Population Growth and Its Long-Term Implications
Toronto’s population growth, fueled by immigration and economic opportunities, is expected to remain a driving force in the housing market:
- Continued Demand for Rentals
With thousands of new residents arriving each month, the demand for rental properties will likely outpace supply, sustaining high rents and low vacancy rates. - Pressure on Housing Supply
Population growth will also increase pressure on housing supply, driving demand for new construction. The balance between supply and demand will be crucial in determining future price trends. - Opportunities for Developers
Developers have an opportunity to meet the growing demand by focusing on multi-family housing projects, particularly in transit-oriented areas.
The Human Element: Tenants Facing Challenges
For Sarah, a recent immigrant from India, finding a rental property in Toronto was a daunting task. Despite having a stable job in tech, she faced stiff competition and high rents.
After weeks of searching, Sarah secured a one-bedroom apartment in North York for $2,850 per month, which was above her initial budget.
Her story highlights the challenges many newcomers face in Toronto’s tight rental market, where affordability and availability remain pressing concerns.
Conclusion: Rental Demand and Population Growth Shaping the Market
Toronto’s 6.4% increase in rental prices and 120,000 new residents in 2024 reflect a market under pressure but also full of opportunity.
For renters, navigating the competitive market requires preparation and flexibility, while landlords and investors stand to benefit from rising demand and strong rental income.
As Toronto’s population continues to grow, the interplay between rental demand and real estate prices will remain a key driver of market trends.
Whether you’re a renter, buyer, or investor, understanding these dynamics is essential to navigating Toronto’s evolving housing landscape.
