For Ontarians, 2022 ushered in an unwelcome sense of deja vu as the province re-entered a modified Step Two in the Roadmap to Re-open in response to the surging Omicron variant.

With entertainment venues and indoor dining shuttered until at least January 26 (and likely longer if precedent is any indication), it’s feeling an awful lot like the spring months of 2020 -- and some market watchers are wondering if that means the resurgence of certain pandemic-era real estate trends, namely a decline in the rental market.

Read: This Lockdown Could Be Catastrophic for Some Toronto Renters

Rents notably took a tumble after the first state of emergency was announced in Ontario on March 17, 2020; by that April, the national average rent for apartments had dipped 3.2% annually, according to, with landlords rolling out incentives such as cash offers and free months of rent to persuade panicked tenants from fleeing urban cores. 

By the end of 2020, average rents had plunged 7.1% nationally to $1,723. The decline was even more pronounced in Toronto, down -20.4% for one-bedroom units at $1,832, and -17.5% for two-bed units ($2,416). In all, it took about a full year for rents to recoup in Canada’s major urban centres; meanwhile, policies were put in place to protect tenants during the pandemic’s initial economic downturn, such as a freeze on rent increases and a ban on evictions. This further squeezed the bottom line for investors, especially those in the Toronto market, where units generally haven’t been cash-flow positive, even in pre-pandemic times.

Small Landlords Increasingly Keen to Cash Out

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To say this added up to a turbulent year for mom-and-pop landlords would be an understatement -- and it's an experience many aren’t eager to re-live, says Nasma Ali, Broker and Founder of One Group - Re/Max Hallmark. She says a number of her investor and private landlord clients have expressed interest in selling their units following this most recent lockdown. 

“This is like PTSD for investors because, I don’t think people realize, every problem you can think of happening with a tenant, happened during COVID,” she tells STOREYS.

“2020 for investors was absolutely the worst year, I have so many horror stories of things happening; owners couldn’t sell their place at all because the tenants were there, they refused showings, they refused to move out. I have clients whose tenants didn’t pay for a year -- and they couldn’t get them out! There were no hearings, and there was no sheriff, and no recourse. And now they’re saying, I’m not going through this again.”

She adds that many of her affected clients are smaller private investors who may have moved from the city years ago and chose to rent out their original primary residence, while others carry a portfolio of two to three properties. Regardless of their skin in the game, though, more are choosing to cash out.

“I have clients who, since last year, have been selling every single one of their investment properties, en masse,” she says. “I have one client who has four or five properties, and we’re going to sell each and every one of them.”

Lockdown Putting Rental Investment “Under a Magnifying Glass”

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This response is a jarring about-face from what has been a strong year-end performance in 2021, both from a rental and investor market share perspective; fourth-quarter data from Teranet reveals investors made up the largest segment of Ontario homebuyers, accounting for 25% of activity within the marketplace. Vacancy rates have also rebounded in the GTA tightening to 3% in Q3 2021 from 5.1%. Meanwhile, the latest rental data from the Toronto Regional Real Estate Board reveals condo rentals surged 15% year over year, with listing supply dropping by nearly a third.

Emma Pace, an agent at online brokerage Zoocasa Realty, says she largely agrees with Ali’s sentiment, and that lockdowns have served to put the challenges facing small investors under a microscope.

“I don’t think necessarily this is 100% a result of the lockdown, but that the lockdown has just magnified all of the not-so-sexy things about investing in Ontario,” she says. “For instance, the landlord-tenant board -- how much stronger the protections are for tenants than landlords has always been a big sticking point, and I think now it’s become even more difficult, as things are even more backlogged.

“I don’t see as many investors pulling the panic button and just getting rid of things, but I do think that these several lockdowns have made people think. It’s the same thing for investors as it is for homeowners; is this house everything I need it to be, or was it great pre-pandemic? I think that’s more of what these [lockdowns] have done, versus being the thing that’s making them pull the trigger.”

Strong Fundamentals Point to Continued Rental Price and Demand Growth This Year

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However, Pace isn’t feeling at all bearish on what’s to come for rental in the long term, citing the fundamentals underpinning today’s market, especially the lack of supply. She points out that rents have recovered significantly, with larger two- and three-bedroom units now fetching as much – or more – than they did pre-pandemic. There’s also strong appetite among those who want to be at the centre of it all, once the economy re-opens once again.

Ben Myers, President of Bullpen Research and Consulting, which partners with to produce its monthly rental snapshot, concurs, saying today’s small investors would be remiss to exit the market now.

RELATED: Average GTA Rent Expected to Increase By as Much as 11% in 2022

“Rents have already gone up 10-12% depending on the area. There are some areas in downtown Toronto that are as high as 25% year over year, so absolutely enormous growth in rents,” he says.

“I think anyone who is wanting to dump their units already is probably being a little too worried about this current situation, especially with resale prices. And I don’t want to put all investors in one boat, but a significant portion are in the market for capital appreciation, they’re not in it for cash flow, as long as they’re not losing $2,000 a month. If you look at the listings activity in the resale market, it only looks like prices are going to continue to go up, there is not anything to buy out there, and this is causing that cycle to continue -- they’re saying, ‘If I have nothing to buy, why am I going to list my unit?’”

Myers adds that while December through to February tends to be the slowest time of year for the rental market, he foresees this lockdown lasting far shorter than its predecessors, setting the stage for surging rental demand. Given immigration has picked back up -- Stats Canada reports 401,000 people became permanent residents in 2021, the most per year in Canadian history -- and the re-opening economy, rental price growth is poised to skyrocket further in 2022.

“I still remain bullish on Toronto real estate -- it’s good for some and bad for others. I think rents are going to continue to go up, and I think prices are going to continue to go up at least in the short term,” he says. “I think people are, for the most part, tired of COVID, so they’re trying to think of the world in a normal way, and in that way, Toronto real estate has been going up for a very long time, so we’ll see how that continues. But I certainly expect in the short term, in 2022, fundamentals will stay strong for price growth.”