The average rent for a 1-bed in Toronto was $2,474 in September 2022. Rents for a 1-bed in Toronto increased by 27.5% yearly and 6.3% MoM. For a 2 bed, the average rent was $3,361, an increase by 27.7% yearly and 2.9% MoM. The average rent across Canada was $2,043 in September, an increase by 15.4% yearly.
More inventory came onto the market in September, to the extent that the market feels more normal. Market for sellers has surged, demand was more than supply . Market for sellers has surged, demand was more than supply. Supply made a steady gain, signaling movement toward a more balanced market.
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Canadian real estate affordability is getting worse as the market adjusts to higher rates. A Bank of Canada (BoC) update to its Housing Affordability Index (HAI) shows a sharp climb in Q2 2022. An average household now requires nearly half their income to service a mortgage. It’s a level rarely seen in Canada, and experts don’t see it lasting very long as prices drop.
When doing research to determine what one can afford, planning on interest rate rises in the future should be a consideration. Although interest rate rises affect home buying power, it may not be as much as many think. Lenders use several parameters to determine mortgage rate like:
- Current prime rate
- The ammortization period
- Type of interest (fixed, variable)
- Credit history
Also, for pre-construction homes and condos, owners often earn equity before they even take possession.
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