The last four years have been very interesting in the Toronto real estate market.

Actually, the last twenty-two years have been very interesting!  I don’t know that there’s ever been a dull moment for as long as I’ve been in this business, but for the purposes of today’s discussion, we’re talking about “interesting” as it pertains to coming off a two-decade bull run, and witnessing the market decline.

I want you to consider this statement for a moment:

“If I can’t sell the condo, I’ll just keep it, and lease it out.”

Now, ask yourself why and in what situation a condo seller would utter those words.

There are all sorts of scenarios, and every one of these scenarios could be further divided into sub-scenarios a), b), and c).

But consider the following three situations before a person might suggest, “If I can’t sell the condo, I’ll just keep it, and lease it out.”

1) A long-time investor who is looking to sell the condo and exit the space.

2) An end-user who has purchased a home, moved out, and is looking to sell the existing condo.

In the first scenario, the investor is looking to exit the space, can’t get the price he or she needs or wants, and decides to continue being a landlord a bit longer.  That’s not ideal, but it’s not terrible.

In the second scenario, the end-user is clearly in a financial position that allows him or her to close on the home purchase without selling the condo, so being “forced” to keep it isn’t going to result in financial peril.  It does, however, make the owner an “accidental landlord.”

I’ve experienced both of these situations many times over since the market began to decline in 2022, and some have been fine, whereas others have been disastrous.

A couple living in downtown Toronto called me in late 2022 and said that they had purchased a home in British Columbia and had moved out there, and now wanted to list their condo for sale.

At the time, we had discussed how the market was changing and what “realistic expectations” should look like.

I did a full market analysis on the condo and provided them with an opinion on “fair market value.”  They, however, wanted to sell for the price that their neighbour obtained in March.

I told them from the very start, “I don’t think this is the right way to proceed,” but they said they were “in no rush” and “didn’t need to sell,” so I told them that as long as they were okay with the worst-case scenario where the market continues to decline and the condo remains unsold, then we could proceed.

As expected, showings were almost non-existent and we never received an offer.

I told them multiple times that they needed to adjust the price, but they were unwilling.

January came around and they finally agreed to adjust the price, but only to what I had told them the condo was worth in August of the previous year when we first discussed the sale.  Unfortunately, the market was continuing to decline, and that number was now in the rear-view mirror.

Again, they told me, “It’s fine, we don’t need to sell,” and we remained on the market until April.

That’s when they told me, “We’re going to keep the condo and lease it out.”

I did my job; I played devil’s advocate with them and discussed what it would be like for them to “manage” a property in Toronto while they were in British Columbia, but they said they had no concerns about it whatsoever.

We found a suitable tenant in April, and the tenant took possession in May.

Those tenants only stayed for a year, however.  So in May of 2024, I was tasked with finding them new tenants.

That was the last I heard from those clients, but I did notice that in May of 2025, the property appeared on MLS for lease (ie. not with me), only this time, the landlord specified in the lease was a property management company.

I am going to assume, with a high level of certainty, that “managing” a 1,400 square foot, 2-bedroom, 3-bathroom condo in downtown Toronto, as well as the tenants who lease a property like this (their personality, requests, demands, etc), became too much for my (former) clients, and that they finally retained a property management company to take charge.

Every property management company is different, but many will charge 20% of gross rents, right off the top.  That’s a lot.

As for the value of the condo, I don’t think I need to point out that the market has been in steady decline since we first listed it for sale in the fall of 2022.

In the end, you can’t really say whether the actions of these clients were “right” or “wrong.”

Sure, they bit off more than they could chew, and with the benefit of hindsight, it’s easy to say, “They should have sold in 2022,” but they seem to be in a financial position that allows them to keep the condo for as long as they want or need, presumably to chase the market price that existed at our peak in 2022.

There’s an argument to be made that they “should” have taken a 5-6% haircut in the fall of 2022, reinvested the money, and avoided a further 10% decline, but that’s simply one way of looking at it.

Who knows what was in their mind then, or even now.

The point I’m going to make is this:

There are a lot of units on the rental market that were originally intended for the resale market.

We discussed this throughout 2025, and I personally had three clients list their condos for sale last year, then decide to keep them, turn around, and lease them out.

You would think this would have impacted the rental market, especially for condos in the downtown core.  Suffice it to say, most people aren’t failing to sell a 3-bedroom house in midtown, only to turn around and rent it out.

With 2025 now in the books, I want to revisit a quarterly feature here in Toronto Realty Blog and look at the updated statistics for the downtown condo rental market.

When we last looked at the data upon the conclusion of September, we were, rather amazingly, seeing a decline in the number of new condo listings.

That trend continued into Q4:

This is the spitting image of a “reversal of trend.”

New listings were up in six of the first seven months of 2025 (with the one down month only measuring 1%), and then all of a sudden in August, the trend reversed.

From August through December, we saw five straight months where the year-over-year listings were down, and three of those months were down in double-digits.

For all the talk about “the rental market being flooded with inventory,” I’m not sure that the following chart backs that up:

Alright, if you wanted to make the “flooded” claim in March, April, and May, then perhaps you’d have a point.

“Flooded” compared to 2022 and 2023, sure, although it was somewhat in line with 2024.

But when we get into the summer, the trend dramatically shifts.

Not only that, by the time we hit October, the number of new listings begins to fall below both 2023 and 2024.

Listings were still well, well ahead of 2021 and 2022, but a lot more units have been completed since then.

As it pertains to leased units, we were seeing really large year-over-year numbers in Q1, Q2, and Q3.

That also changed as moved into Q4:

I’m not sure what happened in November.  That red figure sure feels like an outlier!

But overall, with the number of lease listings declining, perhaps we shouldn’t be surprised that the number of leased units declined as well.

These don’t have to be tied hand-in-hand, but obviously, you can’t lease what doesn’t exist.

The following chart is an interesting one, and worthy of a subsequent conversation:

How many articles have you read in 2025 about there being “fewer international students” here in Toronto?

Five?  Ten?  Twenty?

That news is everywhere, and considering that September 1st is the most common possession date for students, and thus July is the most popular month for students to tie up a rental, you would think that the number of units leased in the month of July would have plummeted.

But it didn’t.

In fact, the above chart shows what can only be described as a “spike” in July.

You can’t miss it.

It’s literally going to poke your eye out!

Now, once we’re finished looking at the number of listings as well as the number of units leased, we need to put this together and see how efficiently the inventory is being absorbed.

Thus, our absorption rate in the market, or what many people call the “sales to new listings ratio,” or SNLR for short:

Again, I would have to think that, with all the talk about the “slow rental market,” we shouldn’t expect to see a year-over-year increase in the absorption rate.

But it’s not just a year-over-year increase that bears mentioning.

In fact, if you look at the month of October, that 69% absorption rate is higher than 2024, 2023, and 2022, and tied with 2021.

This hardly feels like a “soft” rental market to me.

While the 59% absorption rate in November is substantially lower than in 2021, it’s still higher than in 2024 and 2023, and only 2% below 2022.

December is higher than all of 2024, 2023, and 2022, and trails only December of 2021.

Our bright green line below shows us that this isn’t a soft rental market.  Far from it, in fact…

There’s nothing about this chart that says “weakness” or “soft.”

Nothing says “declining.”

If you want to see declining, just wait until my upcoming post on the GTA resale condominium market, where you’ll see lines on graphs that are almost off the charts, figuratively speaking, and literally speaking as well.

For what it’s worth, I have three investment condos and all three are occupied by the original tenants.  Two of the tenants occupied the property in 2024, and one occupied it in early 2025.

If you’re looking for a takeaway or two from the preceding charts, I would offer this:

1) Lease listings are down year-over-year.
2) Absorption rates are up year-over-year.

Let’s see how Q1 goes, and we’ll meet back here for an update in the first week of April!