Rental Rut

We often talk about the money “wasted” on rent by young people in Toronto and then compare those costs to what they could be paying into their mortgage.

But what about people who can’t even afford to rent?

I have two friends currently looking for rentals in Toronto and you won’t believe what they’re looking to pay…


What do you think the “average” person pays for rent in Toronto?

I know, I know….first we have to define “average.”

We’d have to look at the person’s age, income, and of course the location within Toronto before we could even hazard a guess.

But then we’d also have to look at the property itself and distinguish between houses and condos, and then break it down even further by size.

So forget all that, and let’s just talk about “one bedroom condos” for simplicity.

What do you think the average 1-bedroom condo leases for in downtown Toronto, ie. C01, and C08, bordered by DVP/Waterfront/Dufferin/Bloor?

Take away the 1-bedroom-plus-den units, and take away units with parking.

Let’s dumb it right down to the basic 1-bedrooms.  No dens, no parking.

There are currently 153 condos listed on MLS that meet this criteria, and the average asking price is $1519.36.

Wow.  Did you expect that?  I sure didn’t!

When I think about the “average” 1-bedroom with no den and no parking, I’d like to think the price is probably around $1300 – $1400 per month.

I guess that’s just wishful thinking…

A friend of mine is moving back from Japan in July and will be living in Toronto for the first time in five full years.

He emailed me last week and asked me to help him find a “place to live” when he returns, and without even thinking, I sent him something to the extent of:

Hey dude, no problem!  Let me know when you want to get started.  The average 1-bedroom is going to run you about $1400 per month, FYI.  Do you need a parking space?  What area are you looking in?  Talk to you soon buddy.

His response was something like this:


Well, at least he responded in pastel…

Naturally, my friend freaked out at my “modest” estimate of $1400 per month for rent.

He emailed me back and said that he has been teaching English in Japan for five years; living in squalor while eating rice and saving 100-yen coins like they were gold.  He told me he’d like to find something more affordable…..something in the $600 – $650 per month bracket.


Does that even exist?

Sorry, I don’t want to sound like an elitist, but I can’t imagine paying $600 per month in rent!

Of course, my friend went on to say that he’s looking for an apartment in a high rise building or a basement apartment.  Those will tide him over for the time being as he reintegrates himself with Canadian life.

But I explained to him that even the days of the $600 per month basement apartments have passed!  He’d be looking around $800 – $900 for a “decent” basement apartment, if that’s not an oxymoron…

As for the prototypical “high rise apartments,” I don’t think you’ll be finding any $600 per month apartments in Toronto either!  I paid $610 per month to rent my apartment in Hamilton while attending university…..over a decade ago!

So my friend finally said, “Okay, I guess I can just look for a room in a house.

How is that for an option?

It’s doable.

In fact, if you had a group of four guys with $650 each, you could find yourselves a nice little 4-bedroom family home!

I’d like to think that $2600 could provide a little selection!

What does this say about the state of the Toronto rental market?

Well once again, I’d like to compare it to other cities….like New York!

Try finding a rental in Manhattan for less than two-gees and I’m sure you’ll have a swell time!

$1400 per month for a 1-bedroom condo in Toronto pales in comparison to other metropolitan areas, but on its own, that’s really still a lot of money when you sit down and think about it.

$1400 per month is $16,800 per year.

Now what is a reasonable rent/income ratio?

Look online, and you’ll see ratios ranging from 25% to 35%.

This assumes that the “average” condo renter at $1400 per month is making an average of $48,000 – $67,200.

Gee, I wonder what the average household income in Toronto happens to be…

Another friend of mine is being evicted from his 3-bedroom, $1200 per month apartment at Bathurst & Eglinton where the various landlords haven’t raised the price in the last four years.

He’s coming from a point in the market that shouldn’t have existed four years ago, let alone today.

How do you go from paying $400 per month to looking at alternatives?  What alternatives are there?

With vacancy rates in Toronto at less than two-percent, it’s kind of hard to imagine rents coming down any time soon…


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  1. Homepage says:

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  2. Chris says:

    We are renting a 1 bedrm in a 6-plex in east york, at Glebemont and virginia for about $800/month + hydro. There are places in TO where rent is more reasonable.

  3. vancouverite (for now) says:

    Hey you guys….I’m living out here in Vancouver and Toronto rents look like better deals than out here. A few years ago our Van newspaper compared 3 houses in Vancouver to 3 in Toronto. Results were shocking!! You will pay a milliion dollars for a one level piece of moulding crap (it rains constantly out here) here compared to some very nice large, two-level homes in Toronto shown in the article. The pics in the newspaper said it ALL. I’ve seen young colleagues rent crappy small bachelor suites out here for $1,000 (lucky to pay $900) that I would not have paid even $700 for years ago. I’m renting in the house of my dysfunctional relatives because if I went out on my own on a single person income out here literally half my income would go to rent. If you have a car, or kids, or pets – you cannot live with half your income paid to rent alone. I agree with all your comments about the state of rents overall….but can’t wait to move over there.

    Try renting in Vancouver!!! It sucks!!

  4. Adam says:

    @ Todd

    Douche… Seriously???

    Wasted money on real estate agents? What about wasted money on rent. When you buy you aren’t paying the agent, the seller is. When you buy & sell, it’s still less money wasted than renting, because you (hopefully) made a profit to help offset the costs.

    David’s post was about people that can’t afford to buy, and that’s fine, obviously it makes sense to rent. But if you can afford to buy, and you’re not planning to move in the short term, buying makes financial sense.

    And what about real estate agents and commission? I have nothing to do with the real estate industry, but I have to ask – do you expect them to work for free? What about car salesmen, financial planners, banks, credit card companies…everybody takes a little off the top, whether you like it or not.

  5. Todd says:

    How about the wasted money on realestate agents, Douche!

  6. Adam says:


    And so will rental rates!

  7. Geoff says:

    RE: Kioviadi

    I predict Toronto rents are going to go up 2,212,030,034% next year. Income will drop by 300,300% and the output of the sun’s heat will decline by 9,000,000,000,000,000,000 kilojoules too.

    See, I can make up figures too.

  8. Kioviadi says:

    GTA-wide average monthly rents increased in all categories. One-bedroom apartments rented for an average of $1,463 per month, up 2 per cent from the average of $1,430 recorded during same period last year. The average rent for two-bedroom apartments was $1,909, up 5 per cent from the average of $1,813 per month recorded during the January- April period of 2009.

    Ask your self – why pay this money to somebody else, and not to put this money in your own pocket.
    One-bedroom apartments rented for an average of $1,463 per month – pay $1.200 and own the place.

    For a Toronto apartments price will go up on 40% in 2011.
    Great investment, great savings.

  9. buk says:


    to be fair it’s not safe to assume you’re ultra low variable rate over 3 years. rates will inevitably go up, and so will your mortgage!

  10. Adam says:


    I agree that for 3 years, renting would make more sense. But here are some realistic numbers for you. We recently sold our older condo and bought in King west. My example is pretty close to yours – we have a $300k mortgage ($100k down on a $400k unit). Keep in mind we have a variable rate mortgage, and had a good broker.

    Mortage = $1250
    Maintenance fees = $308 (Building is 1 year old, and has had the 1 year increase already)
    Taxes = $210
    Hydro = $70 (That’s actaully higher than we’ve paid, but summer is coming)
    Total per month = $1848

  11. IanC says:

    Maintenance fees go up and up!

    Renters do pay higher commercial real estate taxes indirectly… But that’s base on the value of the rental building which is a fraction of what the all the condo units of a comparable building are assessed at.

    A CAP REIT type property management company can just fix things (fingers crossed)… but a condo board has to hire expensive engineers and lawyers for every frigging little thing.

    If rentals had more insuite laundry (that’s my problem with most rentals), some could argue longer term is better for the rent equation. If the stock market rebounds (invest in condo law firms and condo management companies)- would the money you saved and invested be preferred over living in a 20 year old condo that fewer people want to by (see previous blog – Age Before Beauty). Paying a 20% mark up for the newest unbuilt product, and in 5 years, it’s already a bit out of date. 10 years – could be worse … Like driving a brand new car off the lot.

    What will SPIRE be selling for in 10 years… I have no idea. Hmmmm….

  12. Geoff says:

    @ JG – personally I think the ‘rent is a waste of money’ line is a load of garbage for all the reasons you outline there.

    Having bought and sold property before, I will say that I think its very difficult to make money with only a 3 year window. You haven’t factored in any repairs or upgrades that you make (and no, not all buyers will pay you 100% of what you put in) either – it’s a highly leveraged investment and you don’t know the climate when you sell it (buyers market?) If had a 3 year time line, I would most likely rent. (Instead I have a 20 year timeline, and own.. with the bank).

  13. Meh says:

    How many units does 2% equate to though?

  14. fidel says:

    Ricmond & Niagara has rentals from 775$ a month, islington & bloor it’s $650 for a bachelor… you can find rentals in that range if you’re somewhat flexible on location

  15. Hisham says:

    I agree – most people looking to move into the city are surprised when they are faced with the reality of today’s rent prices.

    To add on to your already thorough analysis, I would say that not only have rent prices gone up over the years but the size of rental condominium has also shrunk over the last decade.

    I feel that the best value for renters is in newly constructed buildings as they gain occupancy status. This is when you usually have a flood of investors competing with each other to find a tenant. If the renter doesn’t mind coping with the dust and noise for a few months then they can usually get into a brand new condo and at a decent price.

  16. Geoff says:

    I hear what you’re saying but you really can’t compare Toronto to a real metropolitan city like New York, London or Boston. At best we compare with Seattle or possibly Houston.

    In fact, as you write (slightly edited) “…Toronto pales in comparison to other metropolitan areas.”

  17. JG says:

    I’ve been weighing the options on this for a while now -maybe some input from you folks.

    I’ve been watching the MLS – half decent 1 bedrooms – condos with parking for $1400 are available. Recently 230 King St 1 bedroom for $1300 with parking.

    Purchase price for such a place – approx $300,000 – $285k mort – monthly payment $1,657.57.
    Add maitenance fee – approxl $350
    Add prop tax fee $250
    Add water $50 (i might have invented this one)
    Hydro $100
    Total – approx $2400.

    If i was to rent the unit –
    hydro $100
    Total $1400.

    Savings of $1000 – $12,000 for the year.

    Save this amount over 3yrs – $36,000.

    Versus – actually buying the property – mort bal $285k. in 3yrs – bal is approx $265k – $20k equity.
    Whats a reasonable return on investment over 3yrs – 4%.
    Sell prop for $330,000 – minus realestate fees – $16,500 – minus legal fees $2500, minus LTT $5k
    possibly a profit of $40k

    There is a $4k difference in savings – not factoring increasing prop taxes, maintenance fees, and the risk of the investment increasing, decreasing, and being stagnate. As well, i used a low ball cost for the condo. With all indications currently – housing prices coming down – rates being increased, less buyers, new goverment rules, etc –

    Having a short time frame to purchase and sell a condo – ie. the 3yrs – could not an argument be made to rent?

  18. Marz says:

    I think maybe you’re looking at the wrong area. Over here in Etobicoke, you can find 3 bedroom appartments for about $1300 a month. And really, a subway ride from kipling of islington to downtown isn’t all that bad. If your Japanese friend is looking to save some money on rent, he should try heading West a little (of course, I don’t think there’s anything for $600).