✍️ Note from the Leasing Agent:

The GTA rental market has changed a lot in just a couple of years.

We went from the COVID-era exodus out of the city to the supply-heavy market we’re in today.

Pricing has softened in many areas.

And the tone of the market feels fundamentally different.

But there’s one thing that has steadily increased through it all…

Not prices, not supply, not population…

The obscene amount of paperwork required to get a lease done.

When I’m working with a tenant or reviewing an application with a landlord, there’s almost enough information to grant a pre-approval for a mortgage.

And what’s funny is when I’m working with a buyer, I don’t need to see your Notice of Assessment… as long as I know you’re pre-approved, we’re good to go!

But you best believe when it comes to screening applicants, it’s normal to request NOAs, T4s, bank statements, paystubs, your Spotify wrapped, blood type, and if you were on Santa’s good list or not…

And when it comes to hitting the road with tenants, I’ve done enough leases to know what makes an irrefutable tenant package compared to the fraudulent ones that I’ve seen.

And yes… they totally exist.

Fake employment letters. Fake employer websites. Fake PEOPLE!

All in an effort to secure a place to call home.

And to be frank, it’s not always because of the landlord-tenant horror stories we hear about. No one wants to be on either end of a tenant who doesn’t pay rent… or a landlord who won’t fix the sink.

But it’s also because of the system that’s been created.

In Ontario, there’s a backlog of nearly 37,000 Landlord and Tenant Board cases that are still unresolved as of September 2025. And on both sides, this can lead to extreme discomfort for tenants as well as massive financial losses for landlords.

So landlords are more cautious than ever, especially in today’s day and age, with how easy it is to spin-up a website, forge documents, or create anything with AI.

On the flip side, a seller doesn’t care who the hell you are when you’re buying something.

You’re trading property for money.

The disposition of an asset.

Sellers just want the highest price, the cleanest offer, and confidence that you can close.

But when you’re leasing…

You’re lending property for money.

The monetization of an asset.

And so in non-purpose built rentals, the relationship between landlord and tenant really matters. It is an ongoing relationship that requires trust, communication, mutual understanding, and accountability.

Unfortunately, there are some people that take advantage of these relationships. A few bad apples ruins the whole orchard… which destabilizes the whole system… and makes you think:

“Why the hell is Jordan asking for my right arm for this damn lease?”

And to that I say:

Welcome to…

If you’re waiting for a headline that says “rents are falling, congrats everyone, we achieved affordable housing!” this ain’t it.

The more interesting story is why rents can fall in a country that’s been defined by housing scarcity.

Because when the rental market softens, it’s usually not kindness.

It’s a signal.

In January 2026, asking rents for all property types in Canada fell to a 31‑month low of $2,057, declining year‑over‑year for the 16th consecutive month.

That run of declines now surpasses the 15‑month stretch during COVID.

Look a little further and the cooling becomes clearer:

So no, renters didn’t suddenly catch a break.

What’s happening is the market is finally revealing where the pressure is coming from.

And the next question is obvious…

If rents are softening… what part of the rental market is actually doing the softening?

You guessed it:

Condos.

Because condos are the investor-heavy slice of the rental market.

And when assignment supply is mounting and resale exits get tougher, more owners become “landlords by default”… pushing extra units into the rental pool.

Sound familiar?

More condo listings competing for the same (and fewer) tenants is exactly how you get the sharpest rent declines showing up in condo rentals first.

And within condos, the softness isn’t evenly distributed.

It’s concentrated in the product developers developed for speed, margins, and volume.

The easiest layouts to configure and stack by the hundreds into a single building:

One-bedroom units.

Rent softening doesn’t automatically mean renting is getting easier, either.

It usually just means the market finally hit a ceiling.

That’s what the Rental Affordability Index is measuring: average asking rent ÷ average renter household income. So when it prints 29.5%, it means the average renter household is spending roughly 29.5% of their income on rent at today’s asking rates.

And that number matters because 30% has long been treated as the Canada’s affordability line according to Rentals.ca. Push past it and the market doesn’t keep climbing forever… it pushes back through longer vacancy, more listings, and eventually lower rents.

So no; this isn’t “affordable housing achieved.”

This is the market telling us it finally hit the ceiling.

Once rents stop climbing, the rental market doesn’t just “cool.”

It changes how people behave.

When demand is ripping, landlords can move fast and keep the process lighter because the market filters applicants for them.

Multiple offers show up and the best package rises to the top.

When conditions soften however, landlords compete on the most important thing:

Certainty.

For landlords in Ontario, certainty (and recourse) is scarce.

If a tenant stops paying, it isn’t a quick eviction and re-listing of the property…

Notices need to be sent. Hearings need to be scheduled. Cases need to be proven.

All the while, mortgages, taxes, and utilities still need to be paid while stress compounds and the system crawls.

So a softer rental market doesn’t only produce lower asking rents.

It produces:

That’s why “rents are down” can be true at the same time as “leasing feels more intense than ever.”

This isn’t a contradiction; it’s the market reallocating pressure.

Relief shows up in rent.

Pressure shows up in the process.

Not to be confused with purpose-built rentals which are are owned and operated at scale… entire buildings held by institutional capital, pension funds, REITs, or investor groups. They’re professionally underwritten, professionally managed, and built to operate through cycles. Vacancies are planned for. Cash flow is modelled. Systems are in place.

Condo rentals operate a little differently.

They’re owned one unit at a time… by individuals, families, and small investor groups:

Every unit comes with a different mortgage, a different risk tolerance, and a different level of experience. Some owners are analytical. Some are emotional. Some are over-levered.

And in today’s market, most are just trying to make it work.

That fragmentation is why condo rentals reprice faster, screen harder, and react more sharply when conditions change. There’s no portfolio buffer.

So when resale exits get tougher, those units don’t disappear. They get pushed into the rental market.

And TRREB’s Q4 2025 rental data is starting to reflect exactly that:

Translation: leasing activity is up, but inventory is still building, and that gives tenants more choice. More choice forces landlords to reprice.

When prices soften, the most replicated product reprices first and it trickles through the entire rental market.

But that’s the unit side of the story.

Now let’s look at the human side.

The Rental Intelligence Report by SingleKey analyzed hundreds of thousands of rental applications across Canada to map out the average renter profile, affordability pressure, and risk signals.

No affiliation here… it’s just one of the cleanest datasets I’ve seen for what’s happening on the ground.

The report starts with an Applicant Overview of the average renter profile. This is the part landlords should pay attention to because screening doesn’t just reduce risk, they reshape your tenant pool:

Landlord Takeaway: if you draw a hard “no pets” line, you’re not filtering for cleanliness - you’re shrinking your applicant pool. On average, over a quarter of households disappear before you even compare credit or income.

I’m not going to review the entire report here, but it’s packed with useful insights and I’d highly recommend giving it a read.

One more metric worth calling out is rent + debt-to-income → 38%.

Rent-to-income (32%) is only half the story. Once you layer in existing debt, the typical applicant is effectively carrying ~38% of income toward rent + debt. That’s the pressure point that explains why more and more applications need additional documentation, NOAs, bank statements, co-signers or guarantors… all in an effort to add certainty.

Tenant Takeaway: make it easy to say yes. A simple, organized package (verifiable job/income, a clear household-income summary, strong references, and consistent documents) beats an inconsistent explanation every time.

Transparency gets you very far in life.

—

At the end of the day, I feel for both sides of this.

I don’t care what you think about tenants or landlords (or realtors). I’m here to provide a service to readers like you and to the people who trust me with the biggest line item in their monthly budget; be it their rent or their mortgage payment.

I’ve seen the good, the bad, and the ugly on every front.

I know landlords who are out tens of thousands of dollars in unpaid rent, dealing with trashed properties and months of carrying costs, waiting for the LTB to do something…anything.

I know tenants who’ve lived through brutal conditions… flooding, mold, no heat, invasions of privacy, harassment… and still need to fight just to get basic living standards.

So no, I’m not defending one side more than the other.

The system is flawed.

But the goal should be simple: a tenant wants a livable home, a landlord wants rent paid on time… under the contract they both agreed to.

Simple as that.

Now let’s finish strong and try to figure out how exactly we got here.

This chart is the condo machine in one picture.

And it’ll all make sense by the end, bear with me.

For years, presales worked because the resale price at completion usually landed above the presale purchase price.

But when resale prices fall below presale prices… the strategy breaks.

That’s the Bank of Canada’s point in their latest release: the tailwinds that powered Toronto’s condo boom:

- have faded.

Rates are higher. Population growth has cooled across the board. Supply has expanded.

And presales weren’t just “nice to have.”

They’re the engine of it all.

Builders rely on presales to fund projects, and banks typically require around 70% of units presold before financing construction. When investors stop buying presales, projects don’t launch. Starts fall. The machine slows.

During the boom, builders boosted presales by lowering the price point.

The easiest way to do that?

Build micro condos.

That made sense when Toronto (which typically draws ~30% of Canada’s immigrants) saw huge inflows of newcomers in 2022 and 2023.

But demand cooled fast.

The BoC notes net newcomers to Canada dropped from 1.4 million in 2023 to under 300,000 between Q4 2024 and Q3 2025.

That’s a massive drop in incremental demand! Plus it hits the exact renter segment most likely to absorb smaller, more affordable condo units first.

So now we have a mismatch:

Micro units (defined by the BoC as 3 rooms or less) are ~60% of new condo supply… while only ~30% of new households fit the typical micro‑unit buyer profile.

And here’s where it ties back to everything we just covered on rentals.

The softening rental market isn’t random.

It’s the downstream effect of a condo machine that prioritized speculative demand and speed over end-user fit and livability.

When presales stall, product skews small, and exit strategies fail, the excess doesn’t disappear… it spills into rentals and shows up as softer rents, tougher screening, and more “landlords by default.”

When the market is overloaded with small units, the pressure doesn’t just mount in resale; it ripples through the entire rental market. But it shows up first where investor supply is most concentrated: one-bedroom condos.

And it’s also why Rentals.ca notes that part of the downward pressure on rents is compositional, with smaller units pulling the averages down:

By that logic, tenants aren’t necessarily getting a deal…

They’re just paying less on their lease for less of a lease.

Smaller units. Tighter budgets. More competition. More screening. Same housing system stress… just showing up in a different place than we’re not used to.

Which leaves some bigger questions hanging in the air:

With condo sales down 26% across the GTA compared to last January…

To that I can confidently say:

Stay tuned for the next RAZZ Report.