Forecast for the 2018 Rental Market
The rental market is set to see some interesting changes over the next 12 months, and it seems the forecast largely depends on what end of the market you’re looking at.
The ‘lower-priced’ end of the rental market
By ‘lower-priced’, we are referring to more standardized housing options, excluding the ultra-luxury rentals and corporate housing that are so abundant in many world-class cities like Vancouver, Toronto and New York.
For rental properties that fit into this category, it looks to be a strong year. Why? Well, it’s a simple case of supply and demand.
The population of North America’s major cities is growing, and it seems that most of these residents are looking for a place to rent, rather than buy. Some will say they’ve been priced out of the market, others prefer not to be tied to a mortgage. Whatever the reason, ‘generation rent’ is on the up, and most will be seeking unfurnished rentals with a lower price tag.
Despite this, a limited number of these type of homes are being built. Yes, property developments are in the pipeline, but not enough to accommodate the growing urban population. In fact, a report last year indicated that Ontario needs 34,000 rental units to be built every year to keep up with demand. This means it’s falling short by over 6,000 units annually.
And it’s not just population growth. Other issues are also are also impacting this end of the market, with one example being the rent control policy introduced in Ontario last year. This has deterred many developers from building in the region, with 1,000 rental units reportedly being cancelled as a result.
Now the Toronto Real Estate Board says rental vacancy levels in the Greater Toronto area are below one percent. This statistic is replicated in the Greater Vancouver area, where experts suggest the rental vacancy rate is just 0.7 percent. In short, when it comes to the lower-priced end of the market, demand is high, supply is low, and rental prices are rocketing.
The higher-priced end of the market
It’s a different story for the luxury end of the rental market. In fact, furnished units that rent for $5,000 a month or more face a completely different reality to unfurnished apartments that rent for $1,800 a month.
The reasons for this are many and varied. Firstly, demand at this end of the market isn’t quite so great. Secondly, such properties are subject to seasonal fluctuations, with the winter months traditionally being the slow season. Thirdly, new policies are causing Airbnbs to wind down, something which is totally changing the short term furnished rental market and adding more inventory to the monthly or long term furnished rental market.
If you hadn’t heard, cities including Vancouver, Toronto and New York have imposed restrictions on Airbnbs and short term rentals, and are enforcing licences and fines to those who do not comply. Buildings too are cracking down, putting clauses in their strata documents that ban Airbnbs in their buildings.
As a result, we’re seeing an increase in furnished monthly rentals, actually driving down the price for luxury furnished suites, albeit temporarily. As we move into the hot summer market, pricing is expected to re-adjust again. And while things will eventually calibrate, owners at the higher price end of the market may find they have to reduce their pricing, at least in the short term.
Property management services
As policies and legal restrictions are being enforced, the need for professional property management and legal tenant placement services are increasing. If you’re thinking about renting out your property, there are various factors to think about, and you may want to speak to a professional before making any decisions.
The team at Rent it Furnished can help you point out the options that are available to you for your furnished and unfurnished suites. As experts in the luxury furnished rental market, we can advise you on current market trends and rental rates, suggesting how to make the most from your property investment.
Aside from renting your investment, you may also want to talk to us about selling or purchasing investment real estate and what that would look like in today’s real estate and rental market. We offer by the minute pricing and accurate estimates on rates for short term, long term, furnished and unfurnished rentals. Even if you want to live in the property part of the year, we can make it all work and help you choose the correct investment, then lease it and manage it until it’s strategic exit plan.
Should you choose to list your property for rent with us, we will send an experienced agent to take photos, upload the listing onto our website (which gets hundreds of applications from prospective tenants every week), coordinate showings and provide you with applications for your property. Working with us is easy!
You can also benefit from our property management services, whereby our professional management team takes over the day-to-day running of your rental, handling everything from finding a tenant, collecting rent to overseeing repairs and dealing with your legal requirements. This can be a huge relief for any landlord, particularly those who are out of town, overseas or new to the market.
Talk to our property management services team
To find out more about what we do, including our property management services, please contact us and one of our experienced agents will be happy to help you.
Written by Lottie Laken