The wait is over! View the February 2024 Rentsync National Rental Demand Report.
The 2023 summer season seems to have officially kicked off after a tumultuous few months of false starts, periodic slumps, and an ongoing decline in property availability. Demand began to pick up throughout the month while property availability came and went throughout the country. Some markets saw a minimal uptick in overall availability, while others saw a continued and gradual decline in availability further leading to the tightening of market conditions.
Nationally prospects increased +2.6% month–over–month, while our top 40 markets saw more considerable +4.1% growth. Those prospects in the market for a new home remain as motivated as in past months and submit on average 3.99 property inquiries per month which remain relatively stable from the past month. The average number of prospects however has increased +5.6% in our top 40 markets,
Demand scores are up +5.7% from the previous month, with properties down -1.4%, and unique prospects up +4.1%. The market is showing signs of both increased competition and drive from renters, even with this decrease in availability. Whether this is sustainable or not may be too early to determine however this renewed interest by a growing number of renters offers much-needed relief for properties that have recently begun to experience a pinch with reduced lead counts.
Below we will identify notable changes in rental demand, highlight market-specific trends, and discuss what the coming months may look like for the rental demand in Canada.
May saw continued growth in renter demand which was seen towards the end of April. Renter activity began to resurge in many markets across the country, and while still relatively small in terms of overall demand shows the potential for ongoing rental interest and potentially new properties being added to the market with many of those looking for a new home potentially leaving an existing unit which would in turn potentially create new availabilities down the line.
This month saw two notable trends. Firstly, markets not included in May’s report made a resurgence due to an increase in availability which incorporated them into our latest analysis. In addition to this, a decrease in the overall demand rankings of secondary markets along with just a +0.9% increase in secondary demand scores.
Month-over-month (M/M) National demand scores are up +5.6% in May 2023 compared with April 2023. Returning to the growth seen in March and making up for April’s decline we now see a potentially more nuanced start to the summer leasing season.
Year-over-year (Y/Y): National demand scores are down -19.9% in May 2023 compared with May 2022. Annual demand score comparisons while continuing a downward trend have softened from last month's more drastic (-24.2%) annual decline. This trend is unlikely to change until we reach the point at which the unfulfilled demand built up throughout the pandemic was finally met and demand scores began to drop. This period will come towards the end of the year however until that point year-over-year demand comparisons are not likely to be a strong measure of overall market performance. Overall rental demand has flattened and both prospects and available properties have declined at a similar rate.
The top 10 markets showed average growth in May close to that of the national average, increasing +5.7% month-over-month. This is however not the full story as the more mild demand growth is fueled due to a growth in both available prospects +7.4%, and properties +1.6%. It is unlikely that these properties will show a complete reversal of recent trends of property availability remaining low due to the lack of available supply, due in part to historically low turnover rates. Regardless, the slow uptick in availability is a good sign and brings with it a relief to those on the search for new housing.
Average rents continue to grow albeit more slowly than previous months, up +0.6% month-over-month for one-bedroom units. Part of this rent growth is likely attributed to a survivorship bias with the more moderately priced units being leased first, resulting in premium units remaining on the market for a longer period.
Year-over-year the top 10 markets experienced a decline of -31.9% in demand scores. Continuing with this substantial decline in overall demand, the total number of renters is down -17.8%. An increase in availability of rental properties has given rise to competition amongst available properties for the gradually dwindling population of available renters. We’ve long since reached peak leasing activity with the yearly comparison simply showing a long drawn-out period of decline.
With fewer people willing to leave their existing homes in fear of a steep increase in their cost of housing, whatever properties remain available have a harder time filling vacancies.
To better segment our data and analyze what is happening within specific markets across Canada, we have broken down the rest of our data into 3 key market segments:
Here we will gain a deeper perspective on demand across larger population centers and trends in various markets.
*Overall demand scores are up +7.7% month-over-month, unique prospects are up +4.9%, and properties are down -2.6%.
Primary markets experienced a restless month with an increase in overall renters, alongside a continued tightening of property availability leading to an increase in average prospects per property and benefiting those properties looking to fill vacancies. The overall ranking of primary markets saw little movement in April with Calgary holding the top spot from last month, and Vancouver gaining 1 spot in turn pushing Scarborough into 4th place.
Not all markets saw equal monthly growth, with 3 of the top 10 markets showing substantial declines in unique prospects (North York, Mississauga, Montreal, and Winnipeg) of which Montreal showed the greatest decline at -9.97% month-over-month.
Average rents continue to trend upwards, except for Calgary, Winnipeg, and Mississauga which showed minimal negative movement. The remaining markets saw an average monthly change of +1.9%. With a 0.5% increase compared to the previous month’s increase, this shows that these markets are likely to continue to grow as competition ramps up.
*Year-over-year demand scores are down -8.9%, prospects are down -13.6%, and properties down -20.6%
For the fourth month straight we see a year-over-year decline in number of prospective renters, continuously becoming more exaggerated and showing greater declines with each passing month. With rental demand well beyond its peak, likely, most individuals searching for a home anytime over the past year have already secured a place to call home. Many are now opting to stay put rather than move and with that pay a higher rental rate for their new home.
Unfortunately with a return to tighter market conditions, annual comparisons are becoming less valuable as communities return to an almost frozen state with limited availability and a maintained albeit growing demand for rental apartments.
*Secondary markets demand scores are up +0.9% month-over-month, unique prospects are up +1.5%, and property counts are up +0.6%.
Secondary markets saw the most muted monthly changes in May relative to primary and tertiary markets. With an average increase of less than 1% in average prospects per property half the markets in this list saw a decline in overall demand, while the other saw varied increases in prospects, properties, or both.
Key markets to note are Surrey, and Halifax both of which experienced significant growth in unique prospects, alongside London which saw the highest monthly growth in property availability of +6.5%. Average rents trended downwards for a majority of secondary markets with a monthly average change of -0.15% for one-bedroom units, substantially lower than that of primary markets and that of the broader country.
*Overall, year-over-year demand scores are down -41.5% year-over-year, with prospects down by -33.5%, and properties down by -4.7%.
As with all annual comparisons, they are disconnected from the reality of current market conditions and do not provide a sufficient explanation for the ongoing trends within secondary markets. Overall demand is down and has been the case throughout the year. Many secondary markets however are in the process of stabilizing demand post the covid-induced resurgence in demand and subsequent slowing of leasing activity due to to growing consumer focus on the rising cost of rent.
Market conditions are more challenging for property owners compared to last year. Average prospects per property are down -30.2% year-over-year meaning that filling vacancies has only become more difficult. Although many renters have left secondary markets, they remain a serious contender for many renter households looking for access to major markets, while also reducing their cost of living.
*Demand scores in tertiary markets increased by +3.9% month-over-month, unique prospects are up +4.1%, and available properties are up +0.2%.
Tertiary markets made strong strides in May with growth in prospect counts on par with the national average. Overall property availability remains flat month-over-month which had the effect of reducing growth in average prospects per property to only +3.9%.
Tertiary markets are showing strong growth entering the summer season with increases in both renter demand and availability of supply. Whether this additional interest is due to new entrants into these markets, a realization that they offer more affordable housing opportunities, or simply locals looking for a change; it remains a positive indicator for property owners and managers.
*Overall, year-over-year demand scores are down by -27.1%, unique prospects are down by -18%, and available properties are down by -5.8%.
Annual comparisons show declines which are only marginally worse than those of the broader country. While unique prospects are down in line with the national average, available properties have dropped faster than the national average suggesting that tertiary communities offer more opportunities to new renters than might otherwise be available in larger markets.
We will have to continue tracking these communities as they are the closest to potentially experiencing a pinch with properties growing faster than the broader country which creates a more favourable environment for renters.
Showing signs of recovery and increased demand is a good indicator of things to come for the 2023 summer leasing season. Despite initial setbacks and an ongoing decline in property availability, the rental market shows continued growth with an uptick in renter counts nationally.
Although not felt equally throughout the country, the increase in renter counts offers some relief to properties that struggled to attract high-quality leads and found vacancies gradually coming up. Unfortunately, this imbalance between demand and supply may only further feed the perceived problems with the market, with a greater number of people competing for a shrinking supply of units only further incentivizing runaway rent growth. Average rents have for the most part stalled, increasing by 0.12% month-over-month across our top 40 markets.
Whether this growth in demand is ultimately good or bad may be too soon to tell however in the interim it offers much-needed leads to many properties that were beginning to feel the pinch of unleashed units.
Primary markets have taken over from secondary markets as the leader in renter growth. With many now entering the market for new housing and with the slowdown in rent growth, renters see that their opportunities to get into the market before rent growth grows anew are fleeting. Pushing them to make housing decisions now rather than later and motivating more renters into the market.
This initial, albeit important growth in unique renters presents a significant opportunity for property owners and managers to consider their marketing strategies entering the summer period. We encourage all property owners and managers to take a proactive approach to this growth and the other findings of this data to allow for the best position for maximizing lead generation and strong market presence for their rental property.
To maximize incoming leads and fill available vacancies, consider booking a strategy call with Rentsync to ensure your leasing and marketing initiatives are positioned correctly.
To present this data, Rentsync has determined three key calculations for each area of the report, they are as follows:
Demand Score: Our demand score is rated out of 10 (with 10 being the highest score a city can receive), and is calculated based on unique leads per property, per city, and compared against benchmark data.
For Example Surrey, BC received a demand score of 6.0 this month, versus 6.1 last month. Meaning Surrey experienced a
0.1 point decrease in its demand score.
Demand Percentage (% +/-): This is determined according to the year-over-year (YOY) or month-over-month (MOM) increase or decrease in unique leads per property.
For Example The month-over-month demand scores in Surrey, BC went down -1% in April 2023 versus March 2023, while maintaining the same position within our rankings as the highest-achieving market in April. The year-over-year demand score in Surrey decreased by 2.6 points representing a -30% decrease from April 2022.
Position: The position is determined by unique leads per property, with cities that have at least *20 properties or more. The position will vary depending on demand.
For Example This month, Surrey, BC achieved the top spot on our Top 40 Canadian Cities in Demand rankings, representing a 1 position increase in our rankings from last year.
*This report provides month-over-month rental listing data for April 2023 versus March 2023, as well as a year-over-year comparison from April 2023 versus April 2022. It also outlines the month-over-month and year-over-year trends in primary, secondary, and tertiary markets.
January, 29 2024
January, 19 2024
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