A sort of chill is settling over Toronto’s rental market. Local agents say that demand is down, properties are taking longer to lease out, inventory is flooding the market, and conditions are tilting in favour of tenants for the first time in years.

Anya Ettinger, an agent with Bosley Real Estate, says that she’s had two rental listings so far this month — a two-bedroom condo in the Yonge and Dundas area and a house in the Ossington area — and both have garnered very little interest from prospective tenants.

“We’re really struggling to get showings and even had to reduce the price on the house. And it wasn’t even overpriced; we priced slightly higher than what the owner got for it last year,” she says. “Both of those properties six months ago or even four months ago would have been gone in less than a week. We probably would have had multiple offers and back-to-back showings.”

These are not one-off cases, Ettinger adds. “There are definitely more properties that are getting offers below asking — not a crazy amount, it's still pretty rare, but more than there would have been a couple of months ago.”

Ettinger’s observation is evidenced by the fact that the annual rate of rent inflation in Toronto dipped 0.8% in October according to new data from Rentals.ca and Urbanation. Although that figure may seem slight, it marks the first decrease in the metric since August 2021.

As well, month-over-month rent growth is slowing, with just a 0.2% uptick in average asking rent observed between September and October. That figure has come down from 1.5% recorded between August and September.

Urbanation President Shaun Hildebrand attributes the slowdown to renters moving out of Toronto and into less expensive markets. However, Ettinger says she’s not seeing this play out in a noticeable way. On the contrary, she’s noticing that fewer people are looking to move these days.

Beyond the seasonality of the matter — people are less inclined to move when it’s cold out and over the holidays — Ettinger says that Torontonians are quite clearly grappling with what they can and can’t afford.

“Things have slowed down a lot, and I think it's because people have now come to terms with the fact that if they don't need to move, they shouldn't move,” she explains. “It's so expensive to move, to get a U-Haul. And there are so many other costs associated with moving.”

Harishan Thaskaran, an agent with Strata, notes that there’s also a lot more rental inventory available right now. Investors who would have otherwise sold their properties have realized that they aren’t going to get top dollar any time soon, and are opting to rent them out instead.

“But the thing is, if everyone has this mindset, we end up with so much inventory. And when there’s so much inventory, investors lose leverage,” he says. “So now the power is back to the tenant, and they can pick and choose the unit they want and the price they're comfortable with.”

Thaskaran says where he does most of his work, in Scarborough, three brand new condo buildings have recently come available for occupancy at the same time.

“Just in those three buildings, we have 70 units available for rent, and all these owners are now competing with each other,” he says. “That kind of plateaus prices because if you're a unit owner and you're struggling to rent out your unit, you're going to drop the price because you want to get a tenant in there as soon as possible.”

Thaskaran also says that he expects that the cooler rental market conditions we’re seeing today will be short-lived.

“Demand for Toronto’s rental market is always going to be there,” he says. “This is a blip that we're experiencing and I don't think the market is going to be frozen for very long.”

But even so, Thaskaran says that it’s unlikely that the market will heat up the way it did in 2022. He notes that “consumer behaviour has changed,” and on top of that, the cost of living is up pretty dramatically, and wage growth has not been meaningful enough to compensate. He anticipates that those factors will continue to pacify Toronto’s rental market, at least to some degree, in the longer term.