RENTING A PLACE IN 2022? HERE’S WHAT YOU SHOULD KNOW FIRST
Last year, Noélla Ingabire listed a two-bedroom Toronto condo for $2,500 per month around May and barely had a handful of applications. Just months later, in September, she relisted the same unit and immediately got more than 30 potential tenants outbidding one another. Ultimately, the realtor rented out that condo for $4,000.
That’s just one of many cases illustrating the frenzy happening in the Canadian rental market.
BNN Bloomberg interviewed a variety of experts about the trends taking shape this year, and to gather advice for those looking to rent a home.
Are rent prices going to rise in 2022?
Demand is extremely high and activity in January hasn’t been slow like it typically has been in previous years, according to Karen Yolevski, chief operating officer at Royal LePage Real Estate Services Ltd.
She said people continue to put out application after application for new rental listings. “It’s a hot market no matter which way you look at it,” Yolevski said.
“You should certainly know that people are paying well above asked prices to get their desired units and that rents are certainly going up because of the demand, whether that’s for townhouses, condos or what have you.”
According to new figures released Friday by Rentals.ca, the average monthly rent for Canadian properties listed on its website in December was up by 3.8 per cent annually, making it the fourth consecutive month with a positive annual change in rent.
However, those increases came after 16 consecutive months of decline.
“It’s truly indicative of the kind of problems all of us have with making forecasting predictions during the pandemic,” said Ben Myers, president of Bullpen Research & Consulting Inc., who analyzes and writes monthly snapshot reports for Rentals.ca.
“We really don’t know where we’re heading to next and can only make assumptions based on what we think will happen under current COVID circumstances. And, let’s be honest, those keep changing every few months,” Myers added.
“What we do know is this: You can definitely expect prices will be going up in one way or another.”
Who am I competing with for my rental?
Short answer: Everyone, it seems.
Johnder Perez, a realtor with RE/MAX in the Greater Toronto Area, said inventory is incredibly low all around the country.
“You’re finding it more and more difficult to actually have options to look for with rentals,” he said. “And the ones that do exist are places that everyone is looking at the same time. So, the reality is, things are getting very competitive.”
Yolevski said a lot of people are moving from smaller to larger spaces because of remote work conditions and schools still being online.
Figures from Statistics Canada this week confirmed much of that anecdotal evidence: population levels in Canada’s metro areas like Toronto and Montreal dropped by roughly 16,600 and 46,700 respectively in 2021.
Meanwhile, rural areas outpaced the growth of city centres by at least two percentage points for the first time on record.
Perez said that kind of movement has translated to pricing and competition in suburban and rural areas. “Places like Cambridge, Niagara and Kitchener are now just as competitive as Toronto, if only because of their lack of supply and inventory of homes for rent,” he said.
Is all of this because of COVID-19?
Daniel Lee, who runs Torontohomes.TO, an independent online portal for real estate in the city, said the effects of the pandemic on the rental sector are starting to wane.
“COVID-19 still has an impact on the key market trends such as demand and prices. However, the virus is not as influential as it was at the start of the pandemic,” he said. “You still have people moving within the city in hopes to upsize their living space, as so many are working from home or in hybrid models these days.”
But Lee argues that people who wanted to move out from the city “have already done so.”
“If anything, the vaccines have enabled the borders to open up,” he said. “City centres will be filling up again with an influx of immigrants in rental units, as they settle in before purchasing properties for the long term.”
Lee added that the important segment of tech workers are also returning to the office, a group that has historically worked from home. “This is a high household income group that can offer landlords additional rent increases if they do like the rental unit,” he said.
“They are looking to be close to the offices, which are typically located downtown… The increasing demand in this group might influence a rise in the prices of rentals.”
But Ingabire said recent restrictions due to Omicron are showing that the effects of COVID-19 on the rental market are not out of the way altogether.
“I saw a lot of clients telling me about people pulling out from their places and giving their notice because they lost their jobs,” she said.
“And at the same time, that fear of the virus isn’t gone either,” she added. “For example, many tenants think the virus lingers in a space if it isn’t cleaned — they want complete clean-ups before they can even be interested in the units, even when we tell them that it will of course be cleaned before you move in.”
Does this mean it isn’t the best time to be renting in Canada?
Most real estate experts will tell you there is never a “perfect” time to rent a new place. It all depends on your personal circumstances, they said.
But Tirajeh Mazaheri, a Vancouver real estate broker with Coldwell Banker Prestige Realty, said if you have enough money to make a down payment to buy a home, a better time for that might never come again.
“We’re only going to see these home prices going higher and higher and higher,” she said. “So, if you have the option, I would urge you to please buy instead of rent and not wait on that decision.”
She said she “literally begged” her clients to purchase properties in 2020. “And now, they’re regretting terribly that they hadn’t,” she said.
But Diana Petramala, senior economist at Ryerson University’s Centre for Urban Research and Land Development, disagrees.
“It’s a very cyclical market we’re seeing,” Petramala said, who was previously a real estate forecaster at TD Bank. “I would suggest you should try to lock in a good rental price right now and stick to that. Making decisions about buying right now might be better to do down the line.”
She said good rental prices are going to be hard to find after restrictions are lifted.
“For me, January and February are absolutely the best months to be renting,” said Myers. “You’re not competing with people the same way you would be when everyone is ending their contracts before the summer or during the fall.”
What should I know before I start looking for a rental?
Here’s a few tips experts suggested when looking for a rental:
- Have all your documents ready to go before you start looking — including credit score and banking history, ID card photos, provincial tenant application forms, potential information for background checks and the money to make a deposit.
- Know how to market yourself by coming up with reasons for why a property should be rented to you instead of someone else.
- Make sure you have a list of questions to ask when the time arrives.
- Prepare to move fast with the right living space — instead of spending too long thinking about it.
- Understand the long-term costs of renting a space beforehand and that whether buying might work better for you, if you can afford it.
Story by: BNN Bloomberg