What is happening in the Barrie rental market one year into the pandemic that is contributing to such strong growth?
In today’s ultra-hot Canadian real estate market, it’s not easy to be a first-time homebuyer. Despite the coronavirus pandemic that triggered a historic economic downturn, housing prices are climbing in many housing markets across the country. Housing stocks are limited, demand continues to strengthen, and the federal government is beginning to tighten lending standards. While there have been plenty of analyses warning about a bubble on the cusp of popping, others are calling this an affordability crisis.
For many households, especially in places like Toronto and Vancouver, the only option for housing is via the rental market. This might be a reasonable affordable alternative amid spiking home purchase prices. After a decade of rising rents, many tenants have experienced some relief, from lower monthly costs to other incentives. Indeed, there may be no better time to rent than today.
But what about cities that have consistently maintained stellar growth, even during the COVID-19 public health crisis? For years, the Barrie rental market had been one of the hottest, joining a list of other major urban centres such as Vancouver and Toronto.
Barrie Named 4th Most Expensive Rental Market in Canada
According to the PadMapper Canadian Rent Report, Barrie is the fourth most expensive rental market in Canada, with the average one-bedroom apartment costing approximately $1,650/month in March. This is up 5.1 per cent from February and 13 per cent year-over-year. A two-bedroom apartment will set you back an average of $1,770/month in March, up 4.7 per cent from the previous month and 2.3 per cent from the same time a year ago.
In the previous report released in January, Barrie was ranked the fifth; now Barrie only sits behind Vancouver, Toronto and Burnaby as the most expensive rental markets in Canada. At the same time, Barrie saw growth for its one- and two-bedroom units, while other cities either saw rents flatline or drop, indicating that there is potential for Barrie’s ranking to climb even higher.
For example, on an annualized basis, Vancouver reported an 11-per-cent decline for both one- and two-bedroom units. Toronto, as another example, saw a 22-per-cent drop for both bedroom types compared to last year.
“For the first time since January 2020, one-bedroom rents in both Vancouver and Toronto were flat on a monthly basis. (Though rent prices were still down in the double-digits year-over-year.)” the report stated. “These flat rates may be a result of a recent migration of renters who never lived in these pricey cities but wanted to take advantage of the cheap rent and unheard-of move-in specials currently being offered. These new renters moving in evens out the overall demand so we aren’t seeing the trend of continuous decline in rent prices anymore.”
But what is happening in Barrie to send rental rates surging while other markets are witnessing a downward trajectory?
A Housing Affordability Crisis in the Barrie Rental Market?
Are the supply and demand fundamentals elevating the Barrie rental market, or are new housing trends playing a greater role?
Barrie officials have established hundreds of affordable housing units in recent years as part of the city’s original goal in 2015 of increasing supply. However, during this time, new rental developments have entered the market, applying pressure on rents as demand strengthens. Indeed, the competition for units has intensified amid population growth, particularly since the beginning of the COVID-19 public health crisis.
The other factor, according to experts, is that mom-and-pop landlords have sold their properties to institutional investors, such as real estate investment trusts (REITs) and pension funds. This trend has resulted in higher rent across Barrie and the broader Simcoe County region.
Barrie Mayor Jeff Lehman is sounding the alarm, warning of a housing affordability crisis.
“Although there have been gains in affordable housing, there is still much work to be done,” he said in a city news release. “Barrie is experiencing a housing affordability crisis and the ability to find homes for the hardest to house in our community remains a challenge. The city is committed to working together with community partners to increase housing options and affordability.”
Will Demand Continue to Increase in Barrie’s Rental Market?
The Barrie real estate market has sustained its momentum from 2020 into 2021. According to the Barrie & District Association of REALTORS®, residential sales surged 95.8 per cent year-over-year in March, and the benchmark price for single-family homes advanced 37 per cent to $748,700. All the numbers point to declining stocks, with active residential listings falling to their lowest levels in 25 years and months of inventory dropping to just 0.5.
This could mean that more Barrie residents will be staying in the rental market for a while longer. The rest of the Ontario housing market has experienced the same heated trends throughout the pandemic: out-of-town buyers outbidding first-time homebuyers living in the city, leading to significant price growth.
Could there be relief on the way? Some indicators point to growth potentially coming back down into the single digits at some point this year, possibly alleviating higher rents and rising housing prices. Until then, Barrie will continue to be an investment hotspot in the Ontario real estate market.