Renting a home in 2022? Here’s what you need to know first
Last year, Noella Ingabire listed a two-bedroom condo in Toronto for $2,500 a month around May and barely had a handful of applications. A few months later, in September, she relisted the same unit and immediately secured over 30 potential tenants who outbid each other. In the end, the realtor rented this condo for $4,000.
This is just one case among many illustrating the frenzy that reigns on the Canadian rental market.
BNN Bloomberg interviewed various experts on the trends emerging this year and to gather advice for those looking to rent a home.
Will rental prices increase in 2022?
Demand is extremely high and activity in January was not sluggish as it has typically been in previous years, according to Karen Yolevski, chief operating officer at Royal LePage Real Estate Services Ltd.
She said people continued to submit request after request for new rental listings. “It’s a hot market no matter how you look at it,” Yolevski said.
“Certainly you should be aware that people are paying way above asking prices to get the units they want and that rents are certainly going up due to demand, whether it’s for townhouses, condos or whatever.”
According to new figures released on Friday by Rentals.ca, the average monthly rent for Canadian properties listed on its website in December rose 3.8% annually, making it the fourth month in a row with a positive annual change in rent.
However, these increases came after 16 consecutive months of declines.
“It’s really indicative of the kind of issues we’re all having with forecasting during the pandemic,” said Ben Myers, president of Bullpen Research & Consulting Inc., which analyzes and writes monthly snapshot reports for Rentals.ca.
“We really don’t know where we are headed next and can only make assumptions based on what we think will happen under the current circumstances of COVID. And, let’s be honest, those change every few months,” Myers added.
“What we do know is this: you can definitely expect prices to go up one way or another.”
Who am I competing with for my rental?
Short answer: Everyone, it seems.
Johnder Perez, RE/MAX real estate agent in the Greater Toronto Area, said inventory was incredibly low across the country.
“You’re finding it harder and harder to have options to research with rentals,” he said. “And the ones that exist are places that everyone is looking at at the same time. So the reality is that things are getting very competitive.
Yolevski said many people are moving from smaller spaces to larger spaces due to remote working conditions and always-online schools.
Figures from Statistics Canada this week confirmed much of that anecdotal evidence: Population levels in metropolitan areas across Canada like Toronto and Montreal have fallen by around 16,600 and 46,700 respectively in 2021.
Meanwhile, rural areas outpaced city center growth by at least two percentage points for the first time on record.
Perez said that kind of movement has translated into price and competition in suburban and rural areas. “Places like Cambridge, Niagara and Kitchener are now as competitive as Toronto, if only because of their lack of supply and inventory of rental homes,” he said.
Is this all due to 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 were beginning to fade.
“COVID-19 is still impacting key market trends such as demand and pricing. However, the virus is not as influential as it was at the start of the pandemic,” he said. “You still have people moving around the city hoping to expand their living space, as many are working from home or in hybrid models these days.”
But Lee argues that the people who wanted to leave town “have already done so”.
“Vaccines actually opened borders,” he said. “Town centers will fill up again with an influx of immigrants into rental housing as they settle before buying long-term properties.”
Lee added that the large segment of tech workers is also returning to the office, a group that has historically worked from home. “This is a high-income group that can offer landlords additional rent increases if they like rental housing,” he said.
“They seek to be close to offices, which are usually located downtown… Growing demand in this group could influence rental prices to rise.”
But Ingabire said recent restrictions due to Omicron show that the effects of COVID-19 on the rental market are not completely out of the way.
“I’ve seen a lot of clients tell me about people pulling out of their homes and giving notice because they’ve lost their jobs,” she said.
“And at the same time, that fear of the virus hasn’t gone away either,” she added. “For example, many tenants think the virus lingers in a space if it is not cleaned – they want full cleanings before they can even look at units, even when we tell them it will of course cleaned before you move in.”
Does that mean it’s not the best time to rent in Canada?
Most real estate experts will tell you that there is never a “perfect” time to rent a new home. 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 put down a down payment to buy a home, a better time for it may never come.
“We’re just going to see those house prices go up more and more,” she said. “So if you have the option, I urge you to buy instead of rent and not wait for that decision.”
She said she had “literally begged” her clients to buy properties in 2020. “And now they are so sorry they didn’t,” she said.
But Diana Petramala, senior economist at Ryerson University’s Center for Urban Research and Land Use, disagrees.
“It’s a very cyclical market that we see,” said Petramala, who was previously a real estate forecaster at TD Bank. “I suggest you try to set a good rental price now and stick to it. Making buying decisions now might be better done later.
She said good rental prices would be hard to come by after the restrictions are lifted.
“For me, January and February are absolutely the best months to rent,” Myers said. “You’re not competing with people the way you would be when everyone’s contracting out before the summer or in the fall.”
What should I know before I start looking for a rental?
Here are some tips suggested by experts when looking for a rental:
- Have all of your documents ready to go before you start looking – including credit score and bank history, photo ID, provincial tenant application forms, potential background check information and information. money to make a deposit.
- Know how to sell yourself by offering reasons why a property should be rented to you rather than someone else.
- Make sure you have a list of questions to ask when the time comes.
- Get ready to move fast with the right living space – instead of spending too much time thinking about it.
- Understand the long-term costs of renting a space in advance and consider whether buying might work better for you, if you can afford it.