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All Points is recommending a second conversation with your cost of living provider to ensure that they have updated their cost of living data for Canadian cities. I will be honest. You have to read this article with two thoughts in your head at once. Most of it was written in early July (like 20 days ago); and then I went to finish it up in late July and…the prices had changed again. This article couldn’t keep up with things; how is your COLA provider going to with their data coming out on a quarterly basis, based on even earlier data! NOW ONTO THE ARTICLE.
COVID-19 has led to rental price drops in many major cities. Those bringing in assignees in the near future should watch their housing statistics. It will always depend on where they draw their statistics from, but the numbers are moving quickly, so this may be the time to take COLA figures with a grain of salt.
(May data) According to Padmapper , rates in Vancouver saw one and two-bedroom rents drop 5% and 6.3%, respectively May over May. Rentals.ca has different data, but Craigslist backs up these findings showing that median rents for one bedrooms had fallen 2% ($1,850 down to $1,800) and two bedrooms had fallen 7% May over May ($2,800 down to $2,600)
These are some of the biggest drops that have been seen in the country, which will be welcome relief to many assignees and renters.
Update from June data: From May to June no reported drop in Vancouver general, but one of its suburbs, New Westminster, saw a 4.9% drop in one month. This story is not over.
(May data). Toronto was a hot market going into the pandemic with rental rates rising steadily. However, the Toronto rental market prices was quite dependent on immigration to keep these numbers up. All Points still sees declines continuing amongst both purpose built and condominium rentals during this pandemic. Urbanation notes that rents came down 1.3% just between the second half of May and the first half of June, being down 5.7% year over year. The ultra-hot Mississauga market has been hit harder than the center of the city. According to Rentals.ca a single bedroom condo declined 3.3 per cent month-over-month to hit $2,072 just from April to May. They may have slipped even more since.
Update from June data: Toronto values actually came up by 1.2%, but inner suburbs like York and East York saw significant May-to-June declines and Scarborough saw a 4.7% decline between May and June. This seems to be volatile and will be interesting to watch.
(April data): Montreal was also a hot rental spot in Canada before the pandemic, and its rental rates have seen declines in some reports as much as 5.2% for one bedrooms and no decline in other reports. It will be interesting to consider data post-July because of moving day. We are more interested in seeing data from the end of July.
Update from June data: Montreal dropped another 2.7% from May to June. Really watch this space!
(May data): Calgary had already seen a year over year decline in rental prices going into the pandemic, but since has seen an even further decline. Compared to the 6 percent drop as measured from January 2019 to February 2019, that figure is now -9.7% according to rentals.ca by the end of May.
A quick comment on Alberta in general: Alberta remains mobile. Perhaps not even close to previous levels, but in relative terms to the rental market, it is having a negative impact on rental prices. Employees being relocated are not able to take losses on their home sales, due to the levels of their mortgage balances, and they have become willing to rent their homes out until the market rebounds, which is no time soon in our estimation. Expect continued downward pressure across the province in general, with the exception of certain pockets of hot economic activity. Edmonton has been particularly hammered (not so bad if you are relocating there as a renter) with Rentals.ca reporting a year of year staggering 8.7% decline.
Update from June data: Calgary dropped another 4.7% between May and June. Edmonton dropped 9.5% between May and June -yikes! Hopefully this slide ceases.
(July data): Ottawa: Rentals.ca also reported a declining figure for Ottawa, which was also a hot spot going into the pandemic -perhaps too hot. Ottawa’s hot rental market was being fueled by relocation – incoming renters from other regions (both globally, but an awful lot getting away from high Toronto rental prices). Drivers of this relocation (other than sick-and-tired Torontonians) were the significant infrastructure projects that were occurring in Ottawa, but also another tech boom, of whom the best example would be Shopify. As that relocation stopped, so did the fuel. By July , the average asking rent for condos and apartments in Ottawa was $1,746 last month, down 8.7 per cent from March, one of the largest decreases across the country.
Summary: In short, rental prices continue to drop, but are volatile and quarterly historical reports simply will not be accurate. Even on a month-to-month basis (May to June) declines are still occurring, some of them quite significant (Edmonton). But while, some pockets are seeing significant decreases other areas are increasing, which suggests that landlords and renters may be getting used to the new normal. We are watching the numbers monthly and will report accordingly, but the one major month of interest we are looking for is the month of July for Montreal, as that is its major moving month, and more data will flood in at that time.
Please look forward to our follow up article regarding the impact of lower mobility and rental price decreases for the real estate market in general.