Quick answer
- Yes — asking rents in Canada have cooled from their late-2024 peak, with the biggest pullback in Toronto and Vancouver condos and the smallest change in Calgary.
- As of mid-2026, national average asking rent is running below its peak but is still above pre-2022 levels.
- Cooling asking rents mostly affect new leases; existing tenants under provincial rent guidelines see little change.
- For would-be buyers, softer rents narrow the rent-vs-own gap in some cities.
- For small investors, thinner cash flow raises the bar for mortgage approval.
Why this question matters right now
For most of 2022, 2023 and 2024, the national rent story only moved one way: up. Asking rents on new listings set fresh records almost every quarter, and tenants renewing leases braced for annual increases at the top of what provincial rules allowed.
That has shifted. Recent commentary from Rentals.ca and Urbanation shows asking rents have pulled back from their late-2024 peak in most large Canadian markets, with condo-heavy cities leading the softening. Tenants are refreshing rent trackers to see if their next lease can come in below the last one. Small investors — many of whom bought pre-construction condos years ago — are running fresh numbers to see if the cash flow still works.
Both questions matter, and they don’t have the same answer. This is part of a new phase of the Canadian housing market, and it deserves a plain-English read.
Quick start: pick your path
Depending on where you sit, the parts of this article that matter most are different. Use this as your shortcut.
- Read what’s happening with rents to see the size of the pullback.
- Read the rent-vs-buy section to weigh softer rents against owning.
- Try our affordability calculator.
- Read the city snapshot to see how your market moved.
- Read the landlord section to see how cooling rents affect qualifying.
- Use the roadmap to pressure-test the deal at today’s rent.
What’s actually happening with Canadian rents
Two different rent numbers get thrown around, and confusing them is the fastest way to draw the wrong conclusion. Asking rent is the price a landlord advertises for a new lease. In-place rent is what tenants already living in the unit pay, and in most provinces it can only rise by a set percentage each year under a rent-guideline framework.
Asking rents are the number that has cooled. Recent commentary attributes the pullback mainly to a rising vacancy rate — landlords compete harder for tenants when more units sit empty — and to new purpose-built rental supply finally hitting the market after years of construction. In-place rents have not fallen because guideline increases only move in one direction, upward, though slower.
That is exactly why you can read “rents are down” in one report and “my rent went up 2.5%” in your renewal notice the same week. For more on how provincial rules shape this, see how provincial rent control actually works.
Change in average asking rent from 2024 peak
Five major Canadian cities · illustrative only — not a forecast
Source: Rentals.ca National Rent Report and Urbanation commentary. Values are illustrative and may not reflect current published figures.
City-by-city snapshot
Toronto has shown the largest pullback, concentrated in the condo segment. A wave of investor-owned condos completed in 2024 and 2025 hit the rental market at the same time smaller units lost popularity with tenants working hybrid schedules. Vancouver has followed a similar path, with condo asking rents down from the peak while purpose-built rental listings have held up slightly better. Ottawa and Montreal have softened but less dramatically, both because supply additions were smaller and because rent-control regimes constrain price signals more tightly. Calgary is the outlier. Strong interprovincial migration, a growing job market, and less new rental supply have kept Calgary rents roughly flat. For a broader read, see our city-by-city read on the 2026 housing market.
Note on Quebec: real estate transactions in Quebec require a notary (notaire), and provincial sales tax matters fall under Revenu Québec.
What cooling rents mean if you rent (or want to buy)
If you’re renting today and thinking about buying, cooler rents change the math but rarely flip it. In Toronto or Vancouver, the monthly cost of owning a starter condo has typically stayed above the cost of renting a similar unit even after asking rents softened, once you add property tax, condo fees, and a mortgage payment at current rates.
In cities with smaller price gaps between renting and owning, the softer rent number matters more — but so does your total qualifying picture. Every Canadian buyer today has to pass the federal stress test, which qualifies your mortgage at the greater of contract rate plus 2% or 5.25%. Cooling rents don’t lower that hurdle. For the current rate landscape, see where fixed and variable rates are sitting.
Monthly rent vs. estimated ownership cost — 1-bedroom condo
Illustrative snapshot · rent vs. mortgage payment + property tax + condo fees. Not a forecast.
| City | Avg rent (1-bed) | Est. own cost | Monthly delta |
|---|---|---|---|
| Toronto | $2,300 | $3,150 | +$850 |
| Vancouver | $2,450 | $3,400 | +$950 |
| Ottawa | $1,900 | $2,300 | +$400 |
| Montreal | $1,650 | $1,950 | +$300 |
| Calgary | $1,700 | $2,050 | +$350 |
Sources: Rentals.ca (avg 1-bed asking rent), CREA MLS HPI (benchmark condo price), Pegasus Lending rate-details page. Values illustrative only.
What cooling rents mean for landlords and investors
Most Canadian lenders apply a Debt Coverage Ratio, or DCR, to a rental-property file. In plain English, they want the rental income to cover more than the mortgage payment — usually 1.10 to 1.20 times the payment, depending on the lender and the property type. When asking rents cool by 5% to 8%, the covered income drops with them, and a file that qualified twelve months ago at peak rent may not qualify today at the same purchase price.
The federal stress test still applies too, at the greater of contract rate plus 2% or 5.25%. Together, those two rules mean the qualifying bar is higher than the payment you’d actually make. See using rental income to qualify for a mortgage and the OSFI rules for investor mortgages for the full mechanics.
Complex investor files often need lender optionality that a single bank can’t provide. Razi Khan, Founder and Mortgage Broker at Pegasus, works with more than fifty lenders — banks, credit unions, monoline lenders and alternative sources — which matters when a rental deal is on the margin.
Illustrative investor cash flow at three rent levels — one Toronto condo
Rent income vs. lender DCR 1.10 threshold · illustrative only — not a forecast
Illustrative Pegasus underwriting example. Assumes $2,500 monthly mortgage payment at the qualifying rate; DCR line = $2,750 (1.10 × payment).
A step-by-step roadmap for both readers
Whether you rent or invest, the process is the same shape: check the current number, run your own math, and get a pre-approval so you know what you can actually do.
- 1Check current asking rent for your city and unit type.Don’t rely on the national average — pullbacks are uneven and concentrated in condos.
- 2Run your ownership numbers (or your investor pro forma) at today’s rent.Include property tax and condo fees on the buyer side; use current asking rent, not the peak, on the investor side.
- 3Confirm you clear the qualifying bar.Every buyer passes the stress test at the greater of contract rate plus 2% or 5.25%; investors also need to clear the lender’s DCR at 1.10 to 1.20.
- 4Get a pre-approval to lock in what you can actually borrow.It’s free, non-binding, and tells you exactly where you stand — you can get an instant pre-approval certificate online in a few minutes.
Common mistakes to avoid
A few recurring pitfalls are worth naming before you make a rent decision, a rental purchase, or a refinance.
- Reading the national average and assuming your city or unit type moved the same amount. The pullback is uneven and concentrated in condos.
- Confusing asking rent, which is advertised on new listings, with in-place rent, which is what current tenants pay under provincial guidelines.
- Waiting for rents to fall further before signing a lease and losing your preferred unit to another applicant.
- Assuming softer rent alone changes your mortgage qualifying picture. The stress test still applies at the greater of contract rate plus 2% or 5.25%.
- Buying a rental property using peak-rent numbers in the pro forma instead of re-underwriting at today’s asking rent.
- Ignoring the lender’s Debt Coverage Ratio. Most lenders want rental income to cover 1.10 to 1.20 times the mortgage payment.
For more on how the condo investor picture has shifted, see why the Toronto condo market cooled.
Frequently asked questions
Are rents actually going down in Canada right now, or is it just headlines?
How much have asking rents fallen from the peak in Toronto and Vancouver?
If I already have a lease, will my rent go down too?
Is it a good time to buy a rental condo if rents are cooling?
Does cooling rent make it easier to qualify for a mortgage?
Which Canadian city has the biggest rent decrease in 2026?
Should I keep renting or buy now that rents have softened?
Get a clear read on your numbers
Cooling rents mean different things for tenants and small investors. Whether you’re weighing rent-vs-buy or pressure-testing a rental deal, the useful next step is the same — get a clear read on what you can borrow at today’s rates.
Get an instant pre-approval certificate
About the author
Razi Khan
Founder, CEO & Licensed Mortgage Broker · Pegasus Mortgage Lending · Toronto, Ontario · FSRA Lic # 11479
Razi Khan is the Founder, CEO, and a licensed Mortgage Broker at Pegasus Mortgage Lending Center Inc., based in Toronto. With over 20 years of experience in the Canadian mortgage industry, Razi has personally guided more than 3,000 clients through some of the most complex and high-stakes financial decisions of their lives — from first-time purchases in the GTA to refinancing strategies, alternative lending solutions, and cross-border mortgages for Canadians buying in the United States.
Razi founded Pegasus in October 2008, launching the brokerage at the height of a global financial crisis. He works across the full spectrum of borrower profiles, with particular expertise in complex files including self-employed borrowers, credit-challenged clients, and investors building multi-property portfolios.
Learn more about Razi Khan →Sources & references
- Rentals.ca National Rent Report — https://rentals.ca/national-rent-report
- Urbanation Quarterly Rental Market Commentary — https://www.urbanation.ca
- Canada Mortgage and Housing Corporation (CMHC) Rental Market Report — https://www.cmhc-schl.gc.ca
- Statistics Canada — housing and rental data — https://www.statcan.gc.ca
- Office of the Superintendent of Financial Institutions (OSFI), Guideline B-20 — https://www.osfi-bsif.gc.ca
- Financial Services Regulatory Authority of Ontario (FSRA) — https://www.fsrao.ca
- Canadian Real Estate Association (CREA) MLS Home Price Index — https://www.crea.ca