In recent months, rental market challenges have increased for many.
The demographic of renters is large including those that are new to Canada, young professionals, students, and others who are unable to become homeowners through traditional financing.
While some choose to stay in the rental market, others have had plans of homeownership delayed with the recent interest rate increases. This has caused several rental-market challenges and led many to deal with unpleasant rental obstacles.
1. Rental Market Flooding
The increase in interest rates has slowed down the house-buying market, while significantly increasing the competition for rental properties. This is contributed to a major strain on the amount of properties that are available for those in the rental market.
Outside of the common group of renters, international students returning to study abroad have reduced the supply of rental properties even further adding to the saturation of demand.
In addition, many Canadian university students spent the first two years of the pandemic living with their parents and are also contributing to the flooding of the rental market.
With so much demand, people are “panic lease signing” (Source: Global News) in order to secure a residence. Such a rushed and impulsive decision is proving to be detrimental to renters, as they are committing to properties that many not be in the most desirable condition.
Appliances may not be working properly, heating and AC may not be operable, and the overall cleanliness of a property could be unsatisfactory. This creates further rental property challenge in an already stressed-out market.
2. Rent hikes due to demand
Along with uncertain property conditions and the lack of available properties, another current rental market challenge is the increased cost of rent. Not only is this being caused by the current economic state, but landlords are further increasing their rental prices.
While many landlords made arrangements with their tenants to reduce prices at the beginning of the pandemic, not all are raising prices out of necessity.
Some in the rental demographic are being priced out of homes that they were previously able to afford.
Others are forced to accept a lower square footage, due to the rising cost of monthly rent. While an individual might be able to make this work, those with families and small children may find the reduction in living space particularly challenging.
Hikes in rent may also be creating multi-family households and further decreasing the amount of space families have within their homes.
Though some cultures encourage two or sometimes more families to share a living space, others are moving in with their relatives out of necessity.
Rent hikes are forcing many to re-evaluate their living circumstances.
3. Rental scam increase
With such a high demand in the marketplace, scammers are trying to capitalize on an already vulnerable population of renters creating further rental market challenges.
“The scams are a growing problem, especially during summertime as scammers post fake rental listings online to lure renters into making bookings and sending money, only to find out later a property doesn’t exist or is unavailable for rent.” (Source: Globe and Mail)
This type of scam can be targeted to workers that are no longer in remote positions and are being asked to return to the office. Other vulnerable demographics targeted by this type of scam can be foreign students, students that are pursuing cross-provincial studies, and individuals or families moving to a new city.
Though this may happen when you live in the same city as the listing, scammers might find it easier to target unassuming out-of-towners who are in a panic to secure a residence.
4. National rental market comparison
According to the Rental.ca August Rent Report,
“The average rent for all Canadian properties listed on Rentals.ca in July 2022 was $1,934 per month, up 10.4% annually and 2.4% monthly.”
The report goes on to mention that the average rent is now only $20 less than the rental market peak back in September 2019.
With such skyrocketing rent prices, Canadians face even further rental market challenges based on the cities they live in or are planning to move to. Vancouver and Toronto are amongst the most expensive, followed by other cities in their respective provinces of British Columbia and Ontario.
Edmonton, Calgary, Saskatoon, Winnipeg, and Montreal are all decidedly cheaper to live in. Sitting at a current average rate of $1,333 for a two-bedroom apartment, Edmonton is in the green zone when it comes to rental affordability across Canada.
However, the monthly rent continues to creep up higher and higher causing uncertainty for renters and making the dream of an attached or detached single family home much more distant.
Bridge to Homeownership (BTH)
EP Homes’ Bridge to Homeownership™ (BTH) program is a good alternative to renting and avoiding the current rental market challenges.
Our program can help clients that have good credit and even a zero down payment secure a home for their families.
EP Homes understands that every client’s financial situation is unique and we have structured our program to be flexible.
The program conducts a fair market appraisal on a new home from one of our preferred partner homebuilders to determine how much a monthly payment will be.
Monthly payments have 2 components: rent + savings. The savings component will accumulate to be your down payment at the end of the 3-year lease term.
Our mission at EP Homes is to help everyday people become their best financial selves as homeowners.
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