2023 Residential Rental Market Forecast: Where Is It Heading?
2 min read
2022 had several waves of trends in the rental market. In Early Q1 & Q2, interest rates remained low, and buyers were incentivized to buy properties; however, the rise of interest rates in Q3 & Q4 made it very difficult for buyers to justify the high rates. This then affected the rental market because buyers can no longer lock in at high rates for purchasing their homes, so many of them have decided to rent while they wait for rates to drop again. This was not good news for renters because it caused an increase in competition in the market. Toronto is currently going through an inventory shortage, meaning that there is a lack of rental properties available in the market. The increased number of renters in a market where no units are available created heavy tensions.
So, this raises the question, "Where are we heading in 2023? Will it get better or worse?". The Toronto Regional Real Estate Board announced that the rental prices have gone up 19% in the last few months of 2022 for one bedroom and 14.1% for two bedrooms. On January 25th, 2023, the bank increased the interest rate again; however, it was the lowest percentage change since March 2022.
If rates slow down or are halted, this will benefit renters significantly because it'll allow them to find more properties and not have to out-bid other offers or compete with several others when renting a property. Many new developments are also renting new properties on the market for 2023, which will increase the inventory for renters. All these factors will be crucial for how renters can plan their move and decide if it's the best time to look for a new home.
References
Rental market report. TRREB. (2023, January 31). Retrieved February 6, 2023, from https://trreb.ca/index.php/market-news/rental-market-report
Policy interest rate. Bank of Canada. (n.d.). Retrieved February 6, 2023, from https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/
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