“The average rent for all Canadian properties listed on Rentals.ca was $1,888 per month in May 2022, which represents a year-over-year increase of 10.5%. This also represents a month-over-month increase of 3.7%, the largest monthly increase since May of 2019. The data includes single-detached, semi-detached, townhouse, condominium apartments and rental apartments.” (rentals.ca)
As we can see from the quote above, rental prices have been increasing month over month since November 2020. This is parallel to home prices rising, but now the talk amongst industry leaders and real estate investors is focused more on what will come next.
Let’s look at the industry from a renter’s point of view, and we’ll give you our hypothesis on what we can expect to see in the near future.
Home Prices Are Expected To Come Down In Price
Pundits are expecting home prices to come down over the next few months due to several factors:
Foreign investors may be pushed out.
Interest rates are going up
As home prices come down, more renters will consider buying a home rather than renting. Many intelligent investors sold their houses and moved to rental properties to wait for home prices to sink before buying again. These folks will jump back to a house when the time is right leaving more rentals available and probably pushing rent down.
New Home Construction and Development Are Expected To Increase
Lumber prices are starting to normalize, and shipping routes are also getting back to pre-covid deadlines. This means new home construction will be able to start again. Many companies were on hold or seriously delayed due to the lack of construction materials over the past two years. With these delays now lifting, temporary renters can expect to move into their new homes sooner. Again, this leaves rental properties empty and could bring down the cost of the rent.
What Does This Mean For Investors?
Investors should examine their current portfolio. With help from experienced advisors, a real estate investor should be planning to purchase rental properties in the near future as prices come down. The real estate world is cyclical, so knowing when to buy, sell, and hold on to a property through tough times is the key to success. Reach out to Regalway Homes for advice today!