Rentals.ca March 2020 Rent Report
The average rent for Canadian properties in February was $1,823 per month, a decrease of 3% from January, and a decrease of 3.4% annually, according to Rentals.ca listings data. The median rental rate was $1,725 per month in February, a decrease of 4.2% from both a month ago and a year earlier ($1,800).
Average rent per square foot was $2.30 in February, down 2.5% from January and 6.8% from a year ago. Median rent decreased by 3.5% from January to $2 per square foot, and was down 9% from February 2019.
It might be too early to attribute the February decline to COVID-19 worries, but after a strong spring and summer for rent growth in 2019, rates have trended downward nationally. This report will further dive into changes in rents by property type and location.
The chart below shows the annual change in average rent levels in Canada by property-type form. The most expensive units are single-family homes, with landlords asking $2,543 per month on average in February 2020, compared to $2,393 per month for condominium apartments, $1,886 for townhouses, and $1,536 for rental apartments.
Single-family homes experienced the greatest annual decrease in average rent between February 2019 and February 2020, dropping by 6% annually (from $2,611). Single-family properties also declined month over month, dropping 2.4% from $2,606 to $2,543.
Condo apartments experienced a 1.4% year-over-year decrease between February 2019 and February 2020, and a monthly decline of 1% between January and February.
But townhomes showed both annual and monthly rent growth. Average rents increased by 5% between February 2019 and February 2020, from $1,793 to $1,886, while the monthly increase was 1.7% from January to February.
Rental apartments, which make up the majority of the listings on Rentals.ca, experienced both a year-over-year increase (3.2%), and a month-over-month increase (3%). Despite these increases, rental apartments had the lowest average rents of all the built forms at $1,536.
Percent Distribution of Rentals.ca Listings by Rent Range
The chart below looks at the distribution of Rentals.ca listings by rent range in February 2019 versus February 2020. The two charts look nearly identical, but the share of rentals listed for $800 per month to $1,000 per month in February 2020 versus a year earlier has increased.
This is likely the combination of two factors: The lowering of rental rates in economically challenged regions of the country, and an increase in listings on Rentals.ca from secondary markets. With a nationwide database of listings, the composition of the sample can change and alter the perception of the market. It is important to break up the data as much as possible to get a better apples-to-apples comparisons.
Provincial Rental Rates
On a provincial level, Ontario had the highest rental rates in February 2020, with landlords seeking $2,212 per month on average (all property types). British Columbia had the second highest rental rate at $1,885 per month, while Newfoundland and Labrador had the lowest at $927. With the exception of Quebec, all provinces experienced a month-over-month decline in average rents between January and February 2020.
Rents in Saskatchewan are down 12% annually, rents in Alberta are down 4% annually, while rents in Ontario are up 1% over February 2019.
Average Rent by Property Type and Bedroom Count
The chart below shows average rent levels in select provinces for apartments by tenure: condominium apartments and rental apartments. The data is further delineated by the number of bedrooms.
Condo apartments have higher average rents for each bedroom type and in each province in comparison to rental apartments. In Alberta, average rents were the lowest for each bedroom type for both condo and rental apartments, while the opposite was the case in Ontario. By comparison, rent for a one-bedroom condo apartment in Alberta was $1,396, while the same form of unit in Ontario rented for $2,264.
Condominium apartments are listed for rent at a 30% to 35% premium over the average rental apartment in Alberta, British Columbia and Ontario, while the premium is closer to 45% in Quebec.
Summary of Condominium Apartments by Bedroom Type and Year in Ontario
A detailed summary of condominium apartment rental data in Ontario is shown in the table below. February 2019 and February 2020 are compared via the unit mix, unit size, average rent, and average and median rent per square foot.
Unit mix in February 2020 consisted of 4% studios, 55% one bedrooms, 38% two bedrooms, and 4% three bedrooms. This varied slightly from 2019, where studios represented 4% of units, 59% were one bedrooms, 34% 2 bedrooms, and the remaining 3% were three bedrooms.
Average unit size decreased in all bedroom types between February 2019 and February 2020, most notably in three-bedroom units, which dropped in average size from 1,271 square feet to 1,210 square feet.
Rent per square foot was highest for studios, with an average of $4.43 psf and median of $4.32 psf (most of these units would be located in downtown Toronto). As units get larger, the rent per square foot typically decreases, so the increase in the share of two-bedroom units in 2020 contributed to the decline in the average rent per square foot.
Three-bedroom units had average rent of $2.85 psf, and a median rent of $2.80 psf. Median rent decreased for studios and one-bedroom units, and increased for two- and three-bedroom units.
Municipal Rental Rates
The change in the average rental rate from February of last year to February of this year for all properties types has varied dramatically in Canada’s major markets. Rents are up by 4% annually in Toronto to $2,524 per month (former city, pre-amalgamation); rents are up 15% in Vancouver to $2,334 per month; while rents in Montreal are up 31% annually to $1,708 per month. Despite the fairly large sample sizes in each of these major markets, there are some compositional changes in the data that can over-exaggerate the growth rate.
On the flip side, Ottawa rents declined by 5% annually, Edmonton rents were down 6%, and Saskatoon rents were down a whopping 16% to $1,015 per month.
Asking Rent and Annual Change in Rent for Rental Apartments
The chart below looks at asking rents for rental apartments only in select Canadian municipalities for February with the annual change in average rent shown in the panel on the right hand side. Toronto had the highest average monthly asking rent ($2,3322), with Vancouver close behind ($2,155), while Saskatoon had the lowest ($985).
Montreal was on top of the chart of cities with an annual change in rent at 34%. This report will review individual rental projects in London for a more indepth look at rent growth in this municipality). Calgary apartment rents dropped by 5% year over year, while Regina experienced the second largest annual decline (-14%), and Saskatoon had the largest annual decline at -17%.
London, Ontario Insights
Rent percentiles for the 10th, 25th, 75th and 90th percentile for one- and two-bedroom units are shown in the following chart. This provides some insight into where rent growth could be occurring: In the luxury rental segment or the affordable rental segment?
Between October and November 2019, rental rates for units in the 75th and 90th percentile increased dramatically -- this can likely be attributed to a high-end rental building adding its listings to Rentals.ca during that time. For two-bedroom units in the 90th percentile, average rent increased from $1,249 in February 2019 to $2,036 in 2020.
In November, Rentals.ca added listings from The Harriston at 500 Ridout Street North in downtown London. This luxury apartment project is one of the most expensive places to rent in the city, with average rents at or above $2,000 per month.
Average Rent & Annual Change in Rent for Select Rental Apartment Buildings in London
To further explore the dramatic increase in average rent in London, selected apartment rental rates were broken out in greater detail. The average rental rate for a select number of rental apartment buildings with five or more listings in January/February 2019 and January/February 2020 is presented in the chart below.
The average rate was $1,231 in February 2020, a 19% annual increase. Carlton Court at 59 Ridout Street experienced the highest annual rent increase at 34%, with Landmark Towers at 112 Baseline Road West close behind at 30%. Noel Meadows had the lowest increase at 9%. Landmark Towers at 250 Marconi Boulevard had the highest average rent at $1,487.
Average rent per square foot for Downtown Toronto is broken out in further detail in the following chart. The left-hand side illustrates average rent per square foot by postal code collected via Rentals.ca listings for the month of February 2020, while the right side compares average rent per square foot between February 2019 and February 2020 for the most active downtown postal codes.
Average rent per square foot in February 2020 was highest in the M5R area, at a whopping $5.11 psf. M5V encompasses Yorkville and The Annex, two of Toronto’s most exclusive areas. The lowest average rent per square foot was in the M4X area at $3.42 psf.
Between February 2019 and 2020, the M5J area saw the largest increase in average rent per square foot among the top postal codes, increasing by $0.18 from $3.89 to $4.07 or 4.6% (South Core and Central Harbourfront). In contrast, M5V decreased by $0.20 psf in the same time period (-5%, Entertainment District, King West, Cityplace), with M5E closely behind with a $0.18 decline (-4%, St. Lawrence, east portion of Central Waterfront).
The rental market softened considerably in February, with the national rental rate dropping 3% month over month.
The Coronavirus pandemic has resulted in many would-be renters putting off searching for their first apartment, and many tenants are likely choosing to stay in their residence until health concerns are reduced and economic uncertainty dissipates.
We expect to see a decline in tenant searches during this major global disruption.
But some people could have already taken another job and/or given notice to their landlord, and they will need to find a place to live.
Potential home buyers might also put off purchasing a home and continue to stay in the rental market to upgrade, boosting short-term rental demand.
On the flipside, immigration will grind to a halt, cutting off a major source of tenant demand for landlords. Secondly, young adults living at home or planning a move for a job or school are stuck, not knowing when school will resume and when, or if, their employment will start.
Rentals.ca will continue to monitor the data and listings activity over the coming weeks.
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.