housing
05. housing
Canada’s undersupplied purpose-built rental markets are not only facing challenges of low vacancy rates and quickly-rising rents, but there are incentives for renters not to move—even if their home no longer suits their needs.
SHOULD I STAY OR SHOULD I GO NOW?
The purpose-built rental market has been long neglected in most of the major metro areas in Canada since the 1980’s. Only recently has new construction on purpose-built rental picked back up in a major way, with some exceptions (looking at you Montréal). And while the secondary rental market–individual condo owners renting out their properties–has filled some of the gap left by the purpose- built market, overall conditions remain extremely tight. The overall vacancy rate in major metros in Canada (per CMHC’s definition) hit an all- time low in 2023 at just 1.5%. And those low vacancy rates lead to significant rent growth, with the average rent for a two-bedroom nationally (regardless of whether it was a turned over unit or a continuation of tenancy) growing by 8% last year. But there are other symptoms of an undersupplied rental market today beyond low vacancy and rising rents, and one of those
is low turnover rates. Markets with some of the highest rents (and rent controls on raising those rents within a tenancy) have some of the lowest turnover rates. That makes sense, when rents are rising quickly, the longer a tenant stays in their apartment, they are insulated from current market rents. This leads to a correlation between low turnover rates and greater differences in average rents between turned over and non-turned over units. Here in Greater Victoria, where vacancy is close to the national average at 1.6%, we actually have a healthier turnover rate than most other markets at 15.7%. However, we are also the market that eschews that trend and not in a good way for renters as turned- over units still rented for 37% more than non-turned-over units. This difference in rents is still a strong incentive for renters to stay in their homes, even if their needs change and leads to further imbalance in the rental market.
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