There’s no doubt Canada’s real estate market has been in flux since the beginning of the COVID-19 pandemic, from home buyers migrating to outer-city areas, to soaring demand and prices across the nation.
While the homeownership landscape has transformed, the Canadian rental market has seen its fair share of changes too, including the shifting preferences and priorities of tenants. Whether its location, unit size, or rental prices, those looking to lease have adjusted their needs and wants based on current market conditions.
Conrad Rygier, a Toronto-based broker and REALTOR® with Right at Home Realty Inc, tells us more about how priorities for Canadian renters have changed as of late.
What has happened with Canada’s rental market?
Since spring 2020, the Canadian rental market has been coping with lower levels of demand and higher quantities of inventory. Urban centres such as Toronto and Vancouver recorded higher numbers of rental vacancies and smaller annual price increases from 2019 to 2020, according to insights from the Canadian Mortgage and Housing Corporation. However, the return of global and inter-province migration is expected to support the continued recovery of the rental segment.
Within his local Toronto market, Rygier observed a decrease in rental prices by $300 to $400 between 2019 and 2020. Activity for rentals priced above $3,000 stagnated, as did furnished properties that typically attracted international tenants. Now, prices have quietly crept up again, and the majority of Rygier’s rental clients are currently business professionals looking for new scenery and opportunities.
“Since late spring 2020 to early summer this year, I’ve noticed since that big drop, probably about a $100 or maybe $150 return up in price per month,” said Rygier.
Rygier explained a primary cause of changes within the rental market across the country is related to the effects of COVID-19 and its impacts on the economy. As a result, renters have adjusted their living and commuting preferences accordingly.
“Instead of coming to an office, they can work from home. That facilitates their needs for larger spaces. Also, they don’t necessarily need to be downtown, especially if they’re not working out of the office every single day,” said Rygier.
Why have renter preferences changed, and in what ways?
One of the biggest changes Rygier has noted in current tenants is their desire to live in rent-controlled properties where renters can lock in prices. In Ontario, new buildings occupied for the first time after November 2018 are exempt from provincial rent control, which is a specific percentage a landlord can increase rent every 12 months. Provinces like British Columbia also have policies regarding rent increases.
“With tenants looking forward into the future, it’s a safer bet,” said Rygier. “Let’s say they lock in their lease at $1,900 this year in a rent-controlled building. Next year, if the provincial government allows for rent increases, it’ll be marginal.”
With the work-from-home movement still going strong, Rygier explains many potential renters are in search of more space, particularly units that include a den or office space. Regular video meetings and phone calls are factored into play when thinking about at-home noise and sounds—Rygier says some of his tenants have tested the noise levels of prospective rentals to ensure sound pollution won’t be a problem. According to research published by Local Logic this year, interest in quietness in terms of tenant lifestyle preferences grew by approximately 10% in 2020.
Rygier also noted many tenants wanted to migrate from congested high-rise buildings last year and switch into smaller rentals—a trend that’s faded in 2021.
“This year, at least in my experience, it doesn’t seem to be much of a concern. Most of it has to do with space, noise, and price. Those are probably the three largest criteria,” said Rygier.
Location and neighbourhood amenities still remain a top priority for renters. Local Logic also found more tenants clicked on rental categories offering proximity to grocery stores, parks, elementary schools, and cafés in 2020. All REALTOR.ca listings offer local demographics and enhanced neighbourhood data, including distance to daycares, noise levels in the area, and proximity to restaurants, schools and parks. Rygier explains location preferences haven’t changed much over the past couple of years, and many of the same neighbourhood features and conveniences still remain enticing to renters.
“Most of the locational changes would be people moving out of the city if they chose to take that route. But for the people who are moving into the city, I haven’t noticed much of a change in their requests,” said Rygier.
What does this mean for landlords and investors?
Heading into the last chapter of this year, Rygier predicts the rental market will continue to ease back into pre-pandemic conditions. Landlords have been getting more choice when it comes to prospective tenants, Rygier says, and are willing to wait for a better tenant compared to 2020.
For investors who might be looking to get into the rental sector, Rygier has noted there’s a move towards older investment buildings that would protect tenants from potentially dramatic rent increases.
“From an investor’s perspective, if you wanted to make it easier for yourself to rent a property, it might make sense to try to rent a building that’s early 2018 or older in order to avoid any potential red flags from the tenant’s perspective,” explained Rygier.
If you’re a tenant looking for new digs or a landlord looking to list, consult the help of an experienced REALTOR® for the latest information on your local rental market.
Courtesy: realtor.caPosted by Teri-Lynn Jones on