Low borrowing rates have undoubtedly made the appeal of purchasing real estate in Canada more desirable over the last year. While price wars have warded off some, investors have been going full throttle trying to snatch up the best property in hopes of gaining a return on investment through the rising rental prices.
On the other side of the coin, economic uncertainty has led some Canadian homeowners to consider selling their home and capitalizing on the current seller’s market, and move into the rental market, leaving their mortgage obligations behind. Meanwhile, Canadians who have been steadily renting property over the last decade are digesting the idea that many of them may be retaining their rental status, as the housing market becomes more expensive and less accessible. Millennials, who represent approximately 27 per cent of the Canadian population, are spending more time in rental properties than any other generation prior, due to stagnant wages, high education debt and a nationwide housing affordability crisis.
Pre-pandemic, renters were paying outlandish rates to live in small condominiums and homes, especially in larger cities across the country. However, the pandemic led to many singles moving back in with their parents and short-term rentals sitting vacant, resulting in rental price decreases in many major municipalities. In fact, Eric Bond, a senior specialist with the Canada Mortgage Housing Corporation, notes that the pandemic caused a significant decrease in international immigrants and service industry workers who typically rent property. However, now that international borders are gradually opening, renters may been to move fast to lock in a lease before rental prices go back up.
Renters: Now is the Time to Lock in a Lease
Over the last few months, news sources across Canada have been speculating on when the Canadian border will officially reopen. Given the current vaccination rates worldwide, come the fall season, the Canadian borders will be open to internationals from most countries around the world. This means more tourists, more international business trips, and an influx of post-secondary students from around the globe.
With Canada reopening its borders to non-essential travel for the first time in more than a year and half, it is important for domestic renters to lock in their lease now. An increase in international travel means some property owners may opt to put their rental units back on the short-term rental market using sites like AirBnB, as short-term stays usually bring in more revenue when compared to long-term leases.
Data collected by Rentals.ca reveal that after over a year of declining rental prices, June saw an upward swing which is projected to continue trending upward. August 2021 data reports from the same source state that in July 2021, the average monthly rental price for all Canadian properties listed on the site was up 1.8 per cent on a month-over-month basis, reaching $1,752. While this is still approximately $200 less than the market peak in September 2019, the trend shows that the market is steadily moving toward higher rent prices.
Another factor to consider as a prospective renter is how limited space in post-secondary student residences will affect the rental market within college and university towns. Many schools, such as Dalhousie University in Nova Scotia, have notified students that residence spaces would be decreased in order to curb the spread of COVID-19.
This means more students than ever will be looking for off-campus housing across the country; further increasing demand in the rental market, which will in-turn drive prices upward.
What’s to Come for Renters in Canada?
If you are looking to sign a lease on a rental property, it is better to do it sooner rather than later. With a combination of international travel, international students, millennials getting back on the market, and limited on-campus student housing available, rental markets from coast-to-coast are anticipated to heat up as the temperatures outside cool down!