According to Rentals.ca, the average rental properties listed in May was $1,814 per month. This indicates a drop of 1.4% monthly and 5.4% annually.
In May, the average rental rate was $1,750 per month, which a drop of $50 com pared to April 2020 and May 2019. The national rental market continues to drop due to the COVID-19 pandemic, compared to September peak of 2019, which was $1954 per month. This indicates a total decrease of 7.2%, compared to last year.
According to CMHC, the prediction is that the resale housing market in Canada will suffer a drop of 9-18% annually. Also, CMHC is taking action to protect first-time home buyers by applying changes in the mortgage’s regulations. For example, the new credit score requirement in order to qualify is 680 or higher. This means that even if tenants are able to buy a property, they might not be able to qualify for a mortgage under CMHC insurance. As many Canadians won’t be able to purchase a new home at the moment, it will increase the demand for rentals.
The single-family unit homes are currently the most expensive ones. Landlords charged $2,566 per month on average in May 2020 for this type of units. Condominium apartments were charged $2,234, and rental apartments, $1,468. Rental apartments take up about 55% of listings on Rentals.ca, while condo apartments for lease make up about 25%. Therefore, rental apartments best represent the overall conditions in the domestic rental market.
Between May 2019 and May 2020, single-family homes experienced an annual decrease in average, dropping by 5.1% annually. Condo apartments declined 9.4% compared to last year, and rental apartments, which used to grow 4% per year, fell 3.5% per year, from $1,522 per month to $1,468 per month.
Based on the above data, it is possible to affirm that the rental market is also suffering from a down trend, since many individuals lost their jobs because of COVID-19 and looking for a new place to live it is not their priority at the moment. Some individuals also decided to move back in with their parents in order to save money as well. Also, colleges and universities had to change their platform to online learning, so the rental demand around these institutions also dropped significantly. The average rental rate in Ontario is down 0.6% monthly, while Saskatchewan is down 1.1% and Quebec is down 1.9%.
However, Rentals.ca website reported average rents have increased in May over April in provinces like Alberta, Manitoba and British Columbia.
The average condo and rental apartment in London increased by 2.9% monthly to $1,347 per month, after dropping 11% back in April. Edmonton also suffered a monthly decline of 11% in average rents for condo and rental apartments in April, but also increased by 1% month over month to $1,068.
In Toronto, the average rent dropped by 0.5% in May to $2,290 per month, which follows the 5.9% monthly decline in April.
In conclusion, it is still hard to predict how long the COVID-19 will keep impacting the rental demand for apartments. The new situation might affect renters’ decisions, for example, tenants might now rent a one-bedroom apartment instead a two-bedroom, since now they are working from home. Another example is that tenants might decide to use their extra funds used for commuting and vacation, to get a bigger and more comfortable apartment. All of those scenarios will impact the rental market, but at this time, it is not possible to make any predictions. Rentals.ca will continue to monitor economy trends and examine the new data as the economy starts to slowly reopen.
If you are looking to refinance or purchase a home over the next few months, contact us today at 877-296-2696 or email us by e-mail us at info@homemortgageadvice.ca.