For most of the past decade, Ontario landlords could count on one thing: if a unit went vacant, it would rent quickly, and usually for more than the last tenant paid. In mid-2026, that assumption no longer holds in much of the province. Vacancy is up, asking rents are down, and tenants have more options than they have had in years. That is not a reason to panic. It is a reason to run your rental differently than you did in 2022.
Here is what the data actually says, and what we think owners should do about it for the rest of the year.
Two reports published this summer tell the same story from different angles.
CMHC's 2026 mid-year rental market update found that rising supply and rising vacancy are pushing Canada's major rental markets toward balance. Asking rents, the rents advertised for available units, are still declining in Toronto, and Ottawa has now joined that group, with asking rents falling since Q2 2025. CMHC also reports that landlord incentives have intensified over the past six months. In some buildings they now reach several months of free rent, plus extras like discounted parking, cash bonuses, and gift cards.
The Rentals.ca and Urbanation July 2026 rent report puts numbers on it. The average asking rent in Canada was $2,033 in June, down 4.3% year over year, the 21st consecutive month of annual decline. Ontario apartment and condo rents fell 4.6% over the same period, and Ontario is one of only two provinces where rents are lower than they were three years ago, down 8.0%.
Vacancy tells the same story. CMHC's rental market survey put the purpose-built apartment vacancy rate at 3.0% in both Toronto and Ottawa in 2025. CMHC's own analysis pegs the balanced range at roughly 2.5% to 4.0% for Toronto and 2.0% to 4.0% for Ottawa, which means both markets now sit inside balanced territory rather than the deep shortage conditions of a few years ago.
Three forces are working at once.
First, supply. A large wave of purpose-built rental construction is completing, and in Toronto a surge of newly finished condo apartments that could not sell into the ownership market is being rented out instead. CMHC notes that supply is now outpacing demand for these new units, though condo completions are projected to fall sharply in the coming years, so this source of competition will fade.
Second, demand. Lower immigration targets and a weaker labour market have cooled the number of new renter households forming, especially in the big cities and near post-secondary campuses.
Third, tenant behaviour. CMHC reports that tenants drawn in by move-in incentives are proving more mobile at renewal. They took two months free to sign, and a year later they are willing to move again for the next building's two months free. Turnover is no longer something that only happens to bad landlords.
One nuance matters for owners of older buildings: the softness is concentrated in new stock. CMHC found vacancies highest in buildings completed after 2020 and in units near post-secondary institutions, while older stabilized buildings and family-sized units remain tight. If you own a well-kept 1990s townhouse or a three-bedroom unit, you are in the strongest segment of a soft market. Nationally, three-bedroom purpose-built rents fell just 0.4% over the past year, the most resilient unit size there is.
Averages hide a lot. In June, Toronto asking rents rose 1.2% from May to $2,537, the third straight monthly increase and a possible early sign that 29 months of annual declines are nearing an end. Ottawa rose 1.3% on the month to $2,149.
Kingston is the outlier in the other direction: asking rents there rose 5.9% over the past year, one of the largest annual gains in the country. Meanwhile, suburban GTA markets took the biggest hits, with Ajax down 15.7% year over year and Niagara Falls down 12.5%.
The practical point: a pricing strategy that works in Kingston will lose you money in Ajax, and vice versa. KEILTY manages rentals in 26 Ontario cities, and right now those markets are behaving less alike than at any point since 2020. If you own in more than one city, or you are pricing off what your brother-in-law gets for his unit two hours away, check the local number first.
In a tight market, pricing mistakes are cheap. Ask too much and you still lease in three weeks. In a balanced market, pricing mistakes are expensive, because the cost shows up as vacancy rather than as a slightly lower rent.
Run the math on a $2,200 unit. Holding out for an extra $100 a month earns you $1,200 a year if you get it. One extra month of vacancy while you wait costs $2,200, plus utilities, insurance, and the mortgage payments you cover in the meantime. Two extra months and you have burned nearly four years of that hoped-for premium. Our vacancy loss calculator will do this arithmetic for your own unit, and we recommend every owner run it before setting an asking rent this year.
The second change is quieter but just as important. For years, Ontario landlords absorbed guideline-capped increases on sitting tenants because turnover brought a big reset to market rent. CMHC notes that average rents paid by all tenants are still rising mainly because of higher rents at turnover, but with asking rents falling, that turnover premium is shrinking in the softest markets. In parts of the GTA, a turnover today can mean re-leasing at less than the departing tenant paid, after a month of vacancy and a paint job.
That flips the old logic. In 2026, a reliable tenant renewing at the guideline is often worth more than a vacancy and a reset. Ontario has already announced the 2027 rent increase guideline of 1.9%, so you can model exactly what keeping a tenant is worth over the next 18 months.
Here is what we are doing across the portfolios we manage, and what we would suggest to any Ontario owner.
Price to today's market, not last year's. Pull current comparables for your city and unit type from the past 30 days, not from what you leased at in 2024. If showings are slow in the first two weeks, adjust early. The listings that lease fastest in a soft market are the ones priced right on day one.
Compete on condition and speed. Tenants comparing five options will pick the unit that shows well and the landlord who answers first. Clean, well-lit listing photos, same-day responses to inquiries, and flexible showing times are cheap compared to a month of vacancy.
Work your renewals early. Talk to good tenants 90 days before lease end, not 30. Fix the dripping tap. A tenant who feels looked after does not spend March browsing listings that offer a free month.
Use incentives deliberately. In buildings competing directly with new supply, a modest incentive on a 12-month lease can beat cutting the face rent, because the face rent is the base for future guideline increases. This is worth doing carefully and unit by unit.
Know your segment. If you own a newer condo unit downtown, budget for longer leasing periods and real competition. If you own an older single-family or three-bedroom rental, you hold the scarce product and can be more patient.
Owners managing their own units feel this shift hardest, because leasing speed, current comparables, and renewal discipline are exactly the things that are hard to do part-time. We wrote a full comparison of the costs at property management versus self-management, and our management fee stays a flat $149 plus HST per unit per month regardless of market conditions.
A soft market rewards owners who treat their rentals like the business they are: priced accurately, maintained properly, and leased quickly. The landlords who struggled least through past soft cycles were the ones who stopped chasing the last dollar of rent and started protecting occupancy.
Want to know what your unit should rent for in today's market? Request a free rental evaluation and we will send you a current, data-backed rent assessment for your property, or contact us to talk it through.
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