APARTMENT MARKET OUTLOOK COVID-19’s impact on the rental sector As Canada and the world continue to face unprecedented hardships imposed by the COVID-19 outbreak, it’s hard to fathom that just over a month ago, the rental housing industry was virtually untouched by the pressures now putting many small landlords (and other businesses) in financial distress.
With a large percentage of Canadians now out of work and unable to pay their rent without government support, the world is a very different place. On the investment side, not much is happening given the uncertainty of how deep and long this recession could go on. Apartment sales, like everything else, have stalled. “Things will slow in the coming months as investors take stock of their broader investment portfolios to understand areas of concern,” said Keith Reading, Director of Research at Morguard. “By the summer I anticipate a slowdown in activity while this assessment is carried out. However, later in 2020, I believe activity will improve, as investors look to acquire properties in an asset class that has traditionally exhibited resilience and performed relatively well when compared to the other major real estate classes. After all, people need a place to live no matter what.” Technical recession In terms of the broader economy, major forecasters in Canada are of the consensus that we’re headed for a technical recession, with some recovery in late fall but essentially no growth in real GDP for the year. Altus Group’s latest housing report is forecasting that Canada’s economy will advance by 1.8% this year and accelerate modestly into 2021. And while last year’s job growth will likely not be repeated, best estimates indicate 8 | Canadian Apartment | Part of the REMI Network |
above average growth of 230,000 net new jobs this year and 190,000 for next. In terms of housing starts in 2020, Altus Group says Canada should match last year on the strength of Ontario, Alberta and Saskatchewan. “While we recognize that the world has quickly changed, we feel it is important for our readers to understand that the solid fundamentals had put the housing sector on very solid ground before the recent shocks,” the report states. “In other words, the housing sector went into the current environment in as good a position as possible to be able to post a quick recovery once everyday life goes back to normal.” February 2020: Before the pandemic In late March, Rentals.ca and Bullpen Research & Consulting released their monthly rental report, looking at rental statistics for February all across Canada. At that time, the national average rental rate dropped 3 per cent month over month and 3.4 per cent year over year. Average monthly rent was down (or flat) for one-bedroom and two-bedroom homes in most cities, but a few municipalities bucked the trend including Brampton, Kingston, Burnaby and Quebec City. Toronto had the highest average monthly asking rent ($2,322) for rental apartments, with Vancouver close behind ($2,155), while Saskatoon had the lowest ($985). On a provincial level, Ontario had the highest rental rates in February, with landlords seeking $2,212 per month on average
