Rentals.ca June 2021 Rent Report

Rentals.ca June 2021 Rent Report

National Overview

After six consecutive months of declines, the average monthly rental rate grew by 2% month over month, while the median monthly rental rate experienced an increase of 3.1% monthly.

Average Rent by Property Type and Month

The chart below shows the average rent levels by property type in Canada from January 2019 to May 2021.

Townhouses and basement apartments have been excluded due to the significantly smaller sample sizes, which leads to significantly higher monthly volatility.

The most expensive units are single-family homes, with landlords asking $2,608 per month on average in May 2021, compared to $2,026 for condominium apartments, and $1,597 for rental apartments. Rental apartments typically account for about 55% of listings on Rentals.ca, while condo apartments for lease make up about 25%, suggesting that rental apartments best represent the overall conditions in the domestic rental market.

Single-family homes (single-detached and semi-detached) experienced an annual increase in average rent between May 2020 and May 2021, rising by 1.6% annually. This is in contrast to January, where the average rent was down 15.1% year over year. Average rent increased by a whopping 4.2% month over month as Canadian tenants looking for more space have increased rapidly in recent months.

Condo apartments experienced the steepest decline, decreasing by 9.4% annually. However, condo rents are up 1.7% monthly.

Rental apartments have seen a positive annual change in monthly rental rates for 12 consecutive months starting in June 2020. In May 2021, the average monthly rental rate experienced a year-over-year increase of 9.2%.

Median Rent by Bedroom Type

The chart below looks at the median rent in April and May of 2020, as well as April and May of 2021 by bedroom type (excluding six-bedroom or larger units).

Toward the start of the pandemic in May 2020, the overall median rent in Canada was $1,750 per month when considering these bedroom types — a 2.8% decline month over month. The three-bedroom and smaller unit types all experienced month-over-month declines.

May 2021 paints a more optimistic picture as the country approaches the end of the pandemic. While the median monthly rental rate was slightly lower at $1,650, the median rent experienced a month-over-month increase of 3.1%. None of the rents by bedroom type declined monthly, with increases from 0.9% to 3.7% monthly for one-bedroom to five-bedroom units.

Rent Per Square Foot by Rounded Unit Size

The chart below shows the average rent per square foot for all property types by rounded unit size in May 2020 and May 2021. Units are rounded to the nearest 100, and include only units from 400 square feet (sf) to 1,500 sf.

Generally speaking, smaller units have seen rents decline, and larger units have seen rents increase.

Units with a rounded unit size of 1,400 sf experienced the largest annual decrease in average rent per square foot (psf), declining 7.4% down to $1.65 psf, but that unit size appears to be the exception to the trend. Units with a rounded unit size of 1,300 sf experienced the largest annual increase in rent per square foot, increasing 8.8% up to $1.78 psf.

All units under 1,000 sf saw their per-foot rent levels decline, with units with a rounded unit size of 600 sf declining 5.5% annually down to $2.64 psf.

It should be mentioned that not all units listed on Rentals.ca have square footage included by the landlord or owner, and the listings that do likely skew new, as many of the older rental apartments don’t have square footage data.

Provincial Rental Rates

The following figure shows the average rent and the month-over-month change in average rent for Alberta, British Columbia, Ontario, and Quebec — which are the four provinces with the highest number of listings on Rentals.ca.

Alberta saw its average monthly rent decline by 1.8% from April to $1,201 per month in May 2021; British Columbia declined 1.6% from April to $2,006 per month; Ontario increased 1.3% monthly to $1,942 and Quebec declined 0.6% monthly to $1,631.

Because Ontario has the most listings in the country, it had an outsized impact on the average rental rate on a national basis.

Average Rental Rates by Metropolitan Area

The average property listed for rent on Rentals.ca in May in the Vancouver Census Metropolitan Area (CMA) was offered at $2,141, which represents an annual decrease of 3.3%. The average per-square-foot rent is up 8.2% annually to $3.04, which likely reflects the greater number of small units on the market. Tenants have flocked to larger apartments in locations farther from their place of employment during the pandemic.

In the Toronto CMA, the average rent for all property types declined from $2,266 in May 2020 to $1,992 in May 2021, which is an annual decline of 12.1%. Per-square-foot rent is down 6.6%, moving from $3.01 psf down to $2.81 psf in May 2021.

In the Montreal CMA, the average rent declined 2.2% annually, moving from $1,669 per month down to $1,632 per month. Rent on a per-square-foot basis increased 13.3% annually from $2.11 psf in May of last year to $2.39 in May of this year.

The chart shows that rents are turning up in these three markets, which may simply be the typical seasonal spike. However, with Canada’s vaccine rollout taking off, many cities are opening back up, and many employers will start asking their employees to return to the office.

Municipal Rental Rates

The chart below presents data on the average apartment and condominium apartment rental rates by municipality and area in Canada for May, with the monthly percent change in average rent shown on the right.

Vancouver experienced the largest month-over-month increase among the major municipalities with a monthly increase of 5.4% in average rent to $2,315, the highest in the country.

Hamilton was up 3.3% monthly, while London, Etobicoke, and Mississauga experienced a month-over-month increase in average rent of about 2%.

Toronto rents increased by 1.6% to $2,027 per month on average. Rents declined month over month in Montreal and Quebec City, and rental rates also declined monthly in Fort McMurray and Edmonton.

Average Rent & Average Rent Per Square Foot in Montreal

The chart below looks at the average rent and average rent per square foot in Montreal over the past two years, delineated by condo and rental apartments.

The average rent for a condo apartment in Montreal in May was $1,895 per month, which represents an annual decline of 5.4%. Rental apartments, on the other hand, experienced an annual increase of 1.3%, moving from $1,613 per month in May 2020 up to $1,634 per month in May 2021.

The average rent per square foot for condo apartments has stayed relatively constant, moving from $2.54 psf in May 2020 to $2.50 psf in May 2021 — an annual decline of 1.6%. The average rent per square foot for rental apartments experienced a 16.4% annual increase, moving from $2.08 psf in May 2020 up to $2.42 psf in May 2021.

Average Rent by Rounded Unit Size

Looking at a market on a macro level can mask some of the movements at the micro level. The change in the sample of listings on Rentals.ca can give the impression that the market is moving in a certain direction when it is not.

The chart below looks at condo and rental apartment data by rounded unit size (to the nearest hundred) for suites rounded to 400 sf to 1,000 sf in Montreal. The data is broken out into two periods, the pre-pandemic period of January 2019 to March 2020, and the pandemic period of April 2020 to May 2021.

The overall average rent for a unit pre-pandemic was $1,498 per month when considering these unit sizes only, while the overall average rent for a unit during the pandemic was $1,658 per month. This represents a 10.6% increase between the two periods.

The overall average rent per square foot behaved similarly, increasing 11% from a pre-pandemic rate of $2.16 psf up to an average of $2.40 psf during the pandemic.

There was huge growth in Montreal in the later half of the pre-pandemic period, so the rental rates were lower for much of that period.

Conclusion

After a year of rental rate declines because of COVID-19-related lockdowns, the Canadian rental market is starting to recover. On a national basis, the average monthly rental rate experienced its first month-over-month increase since October of last year, rising 2% monthly to $1,708 per month.

Demand for larger units has not dissipated, as the average monthly rental rates for single-family homes continues to rise, moving from $2,214 in January 2021 to $2,608 in May 2021, a rise of 18% within a couple of months. Anecdotal evidence shows bidding wars, and tenants renting homes sight unseen.

When looking at rental properties with a rounded unit size greater than 1,000 sf, most of these units experienced year-over-year increases in average rent between 1% and 9% annually on a per-square-foot basis, suggesting that big units continue to be in demand as working from home becomes more commonplace.

Most of Canada’s major markets experienced rent growth month over month including Vancouver, Toronto, Calgary, and Mississauga.

As the vaccine becomes more readily available, and the country starts to open up again, the recent increase in monthly rental rates across the country suggest a slow return to normalcy in Canada. As the borders open to further immigration, international students and tourism, rental rates are expected to continue to rise. The fall of 2021 could be a busy season for landlords.

Rentals.ca Data

The data used in this analysis is based on monthly listings from Rentals.ca. The data is much different than the more familiar numbers collected and published by Canada Mortgage Housing Corporation (CMHC).

Rentals.ca data includes basement apartments, rental apartments, condominium apartments, townhouses, semi-detached houses and single-detached houses, where CMHC’s primary rental data only includes rental apartments and rental townhouses. CMHC collects some data on the secondary market, but it is reported separately.

The CMHC rental rates are based on the entire universe of purpose-built rental units in Canada (the stock), while Rentals.ca data is primarily based on the asking rents of vacated units only (the flow) — this is a smaller sample size, but more representative of the actual market rent a prospective tenant encounters. The Rentals.ca data set typically produces much higher rental rates in comparison to CMHC, as vacated units are not subject to rent control.

The average and median rental rates via Rentals.ca can also skew higher than CMHC’s data for several reasons: The inclusion of larger and more expensive unit types like singles, row units and condos; the survivorship bias (overpriced units remain in the sample longer); and the multiple listings of the same property at different rent levels every month.

It should also be noted that properties listed for above $5,000 a month and below $500 a month are eliminated from the sample of units analyzed. Also, short-term leases, single-room rentals, and furnished rental units are eliminated from the sample where identifiable.