COVID-19 changed the rental housing market across Canada, as demand soared in some areas, other markets saw a decline in renter activity, causing rent rates to drop up to 30% in some regions. After a year of COVID, we take a closer look at the Western Canada rental housing market and how it has changed over the year, and where experts see it heading for 2021 and into 2022.
During a recent podcast episode of Sync or Swim, we were able to speak with Bob Dhillon, Founder, President, CEO at Mainstreet Equity Corp, who spoke about Western Canada's rental market, specifically Alberta.
Over the last 5 years, Alberta has seen a nonstop growth in its population. Even as oil prices fell and their unemployment rate started to rise they still continued to see overall population growth. Alberta is one of the most affordable provinces to live in Canada, which contributes to their population growth. Newcomers to Canada, people relocating from other provinces, and the younger population looking for an affordable home are all gravitating towards Calgary and Edmonton.
"The population in Alberta has been growing nonstop during the last five years of the recession, so you know when oil prices fell off the cliff of 2014 our population, grew by 5% in the last five years, 4.92% to be exact. So, population is growing, and then we have the lowest unit count for population, so we got approximately 44,000, 45,000 apartment units on a population of 1.5 million people, which is 2.9%. And let's look at the year 2020, pandemic year, our population grew by .77%, while Ontario grew by .45%, so it's a supply demand equation...if you look at all these data points, I think vacancy rates will continue to decline, a decline that may not happen instantly, but a long-term trends, the next 18 months or so, we'll see a continued decline." – Bob Dhillon, Mainstreet Equity Corp.
One of the biggest changes we saw after COVID hit was how quickly people moved away from highly populated areas. Renters were looking for smaller, boutique-type units that housed smaller amounts of people. Another big contributing factor to the rental market was the idea of a back or front yard space. We quickly learned that outdoor space was crucial to renters who were stuck at home. And as we continue to forecast trends for the housing market outdoor spaces will continue to be a sought-after amenity to renters.
"So I'm seeing a lot of gravitation towards younger millennials wanting to live in low-density buildings versus these massive complexes with multiple elevators and lots of people... And you know what's happening with lots of people, lots of people equals COVID... So it's a low-density mid-market space, which is...where we have a lot of in Western Canada." – Bob Dhillon, Mainstreet Equity Corp.
Affordability will be a big push as the rental housing market begins to transition back to a pre-COVID state. Renters are looking for affordable housing, lower tax rates. They want to be able to afford to live, work, and play. Alberta offers some great rental and buying rates and as we begin to live post-COVID we may see more and more people relocating to areas in Western Canada like Alberta where their cost of living is lower.
"Our economy is gonna diversify and you get the lowest tax rate, and the reality is, it's the only affordable major center, what that means is, can you afford to live in Toronto, Vancouver, and what's your plan B? Affordable housing. Do you know Alberta's got the youngest population and the most educated population and the economy is diversifying and a wealth of Alberta is not oil it's the risk taking entrepreneurs." – Bob Dhillon, Mainstreet Equity Corp.
Affordable housing, lower taxes, outdoor spaces, and low-density areas are going to be big considerations for renters when searching for their next rental. Newcomers to Canada, young renters/buyers, and families will be looking to put down roots in places where they can find budget-friendly living options. As we learned from our podcast with Bob Dhillion, Alberta is able to offer these options and continues to be one of Canada's most affordable major centers.