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Single-family home rentals have traditionally been less prevalent in Canada, with a majority of the rental stock consisting of apartments. However, this is changing as more Canadians are opting for single-family rentals. According to data from Rentals.ca, listings for single-family rentals in the fourth quarter of 2022 were up 44% compared to the same period in 2021, despite the usual seasonal decline in rentals after the summer peak. This trend is driven by a variety of factors, including a growing dissatisfaction with apartment living, shifting renter preferences, and a gradual increase in the average age of renters.
The COVID-19 pandemic jumpstarted the interest in single-family rentals. As many urban dwellers sought more space and a change of lifestyle, they began to look for homes in smaller, quieter communities. These communities offered larger homes, more walkable neighborhoods, and a quieter lifestyle, which was appealing to many renters who had been living in cramped and noisy urban apartments. However, this appeal was short-lived, and as communities began to re-open and compounded by the call to return to in-person work came; many recognized the limitations of smaller communities. Whether they were a lack of available community amenities, a slower lifestyle, or a lack of local employment opportunities, many began to return to larger cities. After having experienced the benefits of a larger home they were reluctant to return to cramped apartment living.
The resurgence in demand for single-family rentals was further driven by the increasing number of middle-income families relegated to the rental market due to affordability issues. Data published by ratehub indicates that as of October 2022, the top 10 cities in Canada require an average household income of $137,474 to purchase a house. With a high of $220,700 in Vancouver, $211,650 in Toronto, and a low of $75,320 in Winnipeg, these numbers have made it difficult for many Canadians to afford a mortgage.
The trend of single-family rentals is also being driven by the changing demographics of renters. As the average age of renters increases, so does their desire for more space and privacy. Additionally, with more middle-income families relegated to the rental market, the demand for larger homes that can accommodate families is also increasing.
As affordability continues to worsen, the trend of single-family rentals is expected to grow. Whether driven by individual owner-investors or larger institutional players, it is clear that this trend represents a significant shift in the Canadian housing market. More and more Canadians will opt for single-family rentals as a viable alternative to homeownership, particularly in areas where home prices have skyrocketed.
Based on the above information, here are a few pieces of advice for landlords:
Be aware: With the trend of single-family rentals on the rise, landlords should consider the offerings they have available. Whether by increasing the number of single-family units in your portfolio, or creating more family-friendly apartments. These can both increase the appeal of your portfolio and ensure you're able to attract a growing and diverse tenant base.
Be flexible: With the growing interest in single-family rentals, landlords should be flexible with lease terms and consider short-term lease options. Be open to negotiating with potential tenants, you could be surprised by how much more appealing your property can be if you are more flexible.
Consider your location: Tenants may not always appreciate the hustle and bustle of big-city living. Consider the effects your location may have on your renter's lifestyle and incorporate that into your leasing strategy.
With the ongoing issues of affordability, the trend of single-family rentals is expected to continue to grow and evolve, providing more options for renters across the country. By following these tips, landlords can be well prepared to navigate the trend of growing single-family rentals, and position themselves to benefit from the ongoing changes to the rental market and renters themselves.
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