One of the secondary effects of the restrictions related to the pandemic has been lessened mobility for people, and not in the sense of being able to walk or anything of the sort but more meaning their ability to go where they need for work or study. In Canada this is more of a factor than in other countries, because we always have a lot of people coming and going on work or study visas as well as significant and ongoing immigration. There’s less of all of that these days, and the lessened competition means rents have gone down.
This is especially true in the major metro areas of the country, and while this is certainly good news on one side of the coin for people looking to rent it is not as positive a development for people who have investments in rental properties and are needing to perhaps lower the rent to fill suites that were filled instantly all the time before. Getting less rent coming in for those properties is going to bite more for some landlords than others.
All of this is something that might be more taken into consideration for certain realtors too, and especially for ones that have clients who buy properties with the explicit idea of having them as revenue properties. Of course, all realtors are looking for those same types of clients too and for obvious reasons. That’s another part of why our online real estate lead generation system here at Real Estate Leads is such a smart choice for those who are new to the business and finding it more challenging than they expected to generate new clients of any sort.
But enough about that, let’s get to the good news – with industry expectations being that this dip in rents is only temporary.
Predicted 3% Rise by End of 2021 Q4
So the consensus seems to be that rents in Canada will continue to go down for a few months still, but then we should see something around a 3% or so rise in them before the end of year. Or at least that’s what is being predicted. And if we are to look at the big cities in particular, rents for Toronto home rentals are expected to go up 4%, Montreal 6%, and Vancouver 3%.
Calgary is expected to stay the same, as economic struggles will mean a fewer number of people moving into Alberta. Overall, many markets and ones of smaller sizes have also seen rents dropping to the point that tenants can lease an apartment with an additional bedroom for much the same price as they were paying last year.
In the bigger picture what this means is that for the first time in decades tenants have plenty of negotiating power on their side. Many of them no longer have to take cheap accommodations in area where they’d rather not live if an alternative exists – and now many times it does.
The Factors
What’s pushing this dip in rents and what should eventually re-establish rental rates across the country are as follows:
- Many people are going to continue working remotely after the pandemic
- Supply will continue to be greater than demand for the first half of the year, but that will change
- Asking rents – and particularly for larger metropolitan areas – will continue to fall, but will stop around mid summer
- Offering incentives to prospective tenants will continue, but as rents rise towards the end of the years there will be fewer of them
- Vacancy rates will remain high for more expensive units but will be tight on the lower end of the market
- ‘Satellite’ cities surrounding major metropolitan areas will continue to thrive, and ones around Toronto especially
- Virtual tours and digital transactions are here to stay and will be part of the renting process too going forward
- The speed and thoroughness of the pandemic ‘recovery’ has the ability to change any and all of this though!
- The re-opening of the border and relaxing travel restrictions is going to be a big factor too
Different Demand Strengths
If we are to take just BC for example, 3 secondary cities in that province experience high rental demand year over year. Richmond had it up 45%, Nanaimo 26% and Victoria 14%. Looking at Ontario the same way the notable location was Sudbury with a 17% increase in rental demand for that city. Saskatoon was the leader in Saskatchewan with an 11% rise in demand.
Another notable was St. John’s NL with a considerable 21% rise there too.
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