Matt HildebrandNovember 30, 2022 at 12:00 AM36 min read

E61: Urbanation & Canadian Rental Demand Trends

“The industry can expect to have real-time analytics and real-time insights as to what's happening in the rental market across the country.” — Shaun Hildebrand

Access to real-time rental market data has always been a challenge in Canada. Luckily, today’s guests are here to share a solution to this problem! We are joined by Max Steinman (CEO at Rentsync) and Shaun Hildebrand (President at Urbanation) to discuss how they are joining forces to develop the most comprehensive market data platform for the rental housing industry in Canada. This exciting partnership will bring together Rentsync’s wealth of multifamily rental listings data, Urbanation’s industry-leading data platform for new purpose-built rental projects and condominium rentals, and decades of analytical expertise. Tuning in, you’ll find out how this new venture will create broader knowledge and expertise regarding what is happening in the rental market across the country.

You’ll also gain some insight into rental demand in Canada as we unpack the unprecedented rent surges we saw in 2022, and Shaun and Max share their advice for how property owners, developers, and marketers can prepare for a short-term pause in the rental market as we head into 2023, plus so much more! To learn more about unlocking intelligent real estate data across Canada, don’t miss today’s episode of Sync or Swim!

Key Points From This Episode:

A look at Urbanation and their focus on the high-rise apartment market.
Announcing the exciting new partnership between Rentsync and Urbanation!
The kinds of reporting that clients and subscribers can expect from this partnership.
An overview of the timeline for the rollout of this partnership and the new platform.
Shaun shares his high-level take on the 2022 leasing season.
Reflecting on the sustainability of these unprecedented rent increases.
Factors that are contributing to rent increases across Canada.
Why new construction of purpose-built rentals has dropped off.
The impact of a recession on the rental market and what to expect going into 2023.
How marketers can prepare for a short-term pause in the rental market.
Economic advice for property owners and developers over the next few months.
Where to access the November Rent Report and what you can learn from it.

Links Mentioned in Today’s Episode:

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Episode Transcript

SH: “The industry can expect to have real time analytics and real time insights as to what's happening in the rental market across the country. And to me, I think it was pretty clear to Max as well, this was a massive knowledge gap in the industry.”

[00:00:13] ANNOUNCER: Hello, and welcome to Sync or Swim, a weekly podcast, brought to you by Rentsync, where we take a deep dive into the PropTech, multifamily, and rental housing industry. In each episode, we uncover the technologies and strategies used to help overcome operational challenges and increase the value of your multi-family investments. Let’s get into our conversation today.

[00:00:37] MH: Welcome back to Sync or Swim. My name is Matt Hildebrand, Marketing Manager at Rentsync, and I'll be stepping in for Nicolina today as your host. We have an exciting jam-packed episode today. Joining me, our very own, Rentsync’s CEO, Max Steinman and Shaun Hildebrand, President of Urbanation. Shaun Hildebrand, no relation to me, just a coincidence. Max, Shaun, thank you so much for joining me today.

[00:01:00] SH: Great. Thanks for having us.

[00:01:01] MS: Thanks for letting me back on the show.

[00:01:03] MH: Always, always. So, before we really dive in, let me start with Shaun. Shaun, why don’t you tell us a bit about Urbanation and kind of what you do over there?

[00:01:12] SH: Sure. So, Urbanation is a research and consulting firm based here in Toronto. We were founded just over 40 years ago in 1981. Our firm's focus is on the high-rise apartment market across Ontario. We track all of new construction condominium apartment projects, all new purpose-built rental apartment projects. We track the secondary rental markets and resell market within the condo space. And our group publishes quarterly reports. We have an online database subscription service that is accessed by virtually all of the region's real estate developers, lenders, policymakers, appraisers, brokerages, it's pretty diverse.

We put out our reports on a quarterly basis, and also produce market feasibility studies for developers. So, we get commissioned to do site specific market reports that ultimately provide recommendations on what should be built, what would be the right mix of units to build, target buyer, target renter, achievable revenues and forecasted growth. We're a very busy firm, we're not a large team. But we keep very busy and very much on top of all of the new development activity that's happening across the region.

[00:02:25] MH: It must be really busy time right now. That's great. Thank you so much for that overview. So, the real reason we have you both on today, we have an exciting new announcement. Rentsync and Urbanation have a new partnership and we're here today to really dive into that. So, throw it to you Max, why don't you tell us a little bit about this partnership, how it came together, and what it might look like for the consumers?

[00:02:46] MS: Yeah, for sure. Well, I think it sort of naturally came together, because Urbanation, and Shaun, and his team have this amazing data powerhouse and portal and subscription service with a really strong reputation in not just the GTA but Canada, in terms of who is looking at this data and using it. And Rentsync has this unbelievable war chest of data across the entire country. Rentsync is a little bit newer to data. Having Rentals.ca and RestFaster and all of the listing sites has afforded us this data, but we're not necessarily the foremost experts in data, so naturally, partnering with a firm that has 40 years of experience and knowledge and such a well built-out platform already made a lot of sense. So yeah, that's what we've done.

We are behind the scenes providing the raw rental market data. Urbanation is processing that data, analyzing it, productizing it, and we're both going to market with it. So, it will be available through either team. If you’re a Rentsync client, you can subscribe to the service via your Rentsync account rep, and if you're already an Urbanation client, you can maintain the relationship there and subscribe to this service as well. So, really easy access as well for the market.

[00:04:17] MH: So, Shaun, Max touched on a bit there on subscriptions and reporting. What kind of reporting can clients and subscribers expect from this new partnership? And how might it differ from what Urbanation is already offering?

[00:04:30] SH: It's a pretty significant expansion in terms of what we're currently reporting. Just going back to what Max was talking about. I think we initially started talking about this, probably over a year ago. We had a mutual appreciation for the lack of quality data on the rental market in Canada generally. We were exploring the opportunity of taking this treasure chest of data that Rentsync has and expanding upon it and putting it into some sort of a database portal. It was sort of a natural step from there, to sort of discuss the next steps to launching what will be, I think a very, very powerful new tool.

So, as we sort of gear up for the rollout, I think what you can expect to see is coverage of basically the entire purpose-built rental market. Initially rolled out are the GTA and Hamilton markets with plans to obviously, take this nationwide. So currently, Urbanation through our subscription portal tracks new purpose-built rental buildings. So, we survey through our relationships with builders and property managers, the newer stock of rentals that have been built in the last 15 years or so. I think we recover about just over 20,000 units in the marketplace. But there's over 350,000 rentals just in the GTA, so we're only tracking 6% share of the overall market.

What this new partnership will allow us to do is basically cover the entire market. So, it's not just the newer stock, it's the older stock, it's the stock that's been renovated and invested in. I think really, just, just creates broader knowledge and expertise as to what's happening across the rental market. So, I think the types of reporting that you can expect to see would be some of the similar sorts of metrics that we already produced, which would be, average monthly rents, average rents per square foot, availability rates, because there is a historical database. We would also be looking at, not only the current rents that are being achieved in today's market, but also, what would be sort of the current average for a building, for instance, based on all the turnover that's happened over the last several years. So, you can get a snapshot of not only current market rents, but existing rents that tenants are currently paying.

We'd be able to create some deep metrics on average days on market between leases, availability rates, so the percentage of units that are coming up for lease and we can do that on a on a neighbourhood basis and building basis, a unit type basis. And then using that data to track trends across time. So, I think it's going to be a pretty interesting way of looking at the market, and that, as of now you've had us tracking the newer stock of purpose-built rentals, and we also track condominium rentals, which are largely newer stock as well. And you have really beyond that, it was it was sort of the CMHC data that would be published annually, which would track all of the rental market. But do it at a very highly aggregated level. You'd have vacancy rates reported, you'd have average rents reported, but it wouldn't necessarily show you what the current market rents for a given area or a given building.

So, I think this does two things. It allows for a comprehensive reporting of current market rents, it does it on a much, much higher level of frequency, right? We're not waiting a year for the data and then getting the data published four or five months after it was actually collected. This is real time data as it occurs. So, the industry can expect to have real-time analytics and real-time insights as to what's happening in the rental market across the country. To me, and I think it was pretty clear to Max as well, this was a massive knowledge gap in the industry. Reporting was very fragmented. You had reports from a whole bunch of different websites. I think Max's team has done a great job of consolidating that. And again, we were very excited to be really the singular source of knowledge and understanding of what's happening in the rental market for not only Toronto, which is our home base, but eventually the rest of Canada as well.

[00:08:34] MH: That's awesome. I can already hear that the developers chomping up a bit. Max, what's the timeline for the rollout of this partnership and the platform? And what locations are we going to start with and as we expand across Canada?

[00:08:47] MS: So, as Shaun mentioned, we're going to be starting with the GTA and Hamilton. We are expected to still hit our original timeline, which was for the new year, I believe, January. We'll have at least those two markets, hopefully ready to go. And from there, we hope that we can be rolling out new markets every three to six months, we're probably going to look to Ottawa next, potentially Montreal, Vancouver, Calgary. So, starting with some of the major urban markets and sort of working our way down the population centres. We’re getting to the biggest cities first. It will take time to get all the way across the country and that's because there is such a focus on quality of data and the end product. There are a lot of data products. I don't even want to say product, but tools, accessible to the average property management company and builder and landlord out there. But they're very, very simple in nature.

We really surveyed our clients before we got into this venture on what clients were looking for. And it wasn't just simple comp tools or simple pricing tools, they needed to have really strong confidence behind the data, and be able to look at trending data, real-time historical trends, existing rents. And because it's going to have all of those features, and it's at such a high quality, it takes time to roll out each market. So, that is a little bit of a difference. We really pride ourselves on what we're going to be bringing to market, in each market.

[00:10:28] MH: Perfect. Thank you for that. It's covered a lot about the deal there. It's very exciting. Shaun, is there anything else you would like the people to know about this partnership?

[00:10:38] SH: No, I think we've covered most of the main points.

[00:10:40] MH: Most the main points. So, for anyone who wants to learn more about the partnership, make sure check out Rentsync, check out Urbanation, follow us on social media. As we get closer to the rollout date, we'll be releasing more information and how you can get in touch with somebody and inquire about becoming a subscriber.

[00:10:57] NS: Like what you hear so far?Make sure you never miss an episode by clicking the subscribe button now. This podcast is made possible by listeners like you. Thank you for your support. Now, let's get back to the show.

[00:11:12] MH: So, I wanted to switch gears a little bit. We've got two industry leaders in our midst. I wanted to ask you both about some of the trends we're seeing across the industry. As many people know, 2022 was one of the hottest, if not the hottest leasing season on record. But as of September, we began seeing a sharp decline in renter demand across the country. Shaun, why don't you take us through what happened in 2022, maybe how we ended up here, and then your thoughts on the leasing season?

[00:11:38] SH: So, the first half of 2022 was really sort of a recovery period. Rents declined through much of 2021. So, it was really just sort of getting back to pre-pandemic levels through the first half of the year. I would say around June, July, we were back to the previous market highs, which was around the fall of 2019. And then from there, the market just took off. I think the summer period of 2022 was probably the hottest rental market that I've ever seen. This coming through in the data. We saw rents surge by like 10% to 15%, within a three to four-month period. It was exceptionally strong growth in a very short period of time, and I think this coincided with a couple of important things.

For one, obviously, it was the timing of interest rate increases. So, we saw a huge pullback in home buying activity beginning in April, as interest rates started to move higher. And obviously, that eroded affordability substantially given how high housing prices were at that time and still are today, even though they've corrected a little bit. And if people are buying homes, they're renting. So, I think with not as many first-time buyers active in the market, you had really more renters chasing pretty much a stagnant supply of units. And so, that put upward pressure on the marketplace.

At the same time, the summer is always the peak season for rental market activity every year. But this year, we had a flood of post secondary students coming back into the city. So, signing leases in advance of the fall return to classes, and that just combined with the erosion in homeowner ownership affordability to create really unprecedented market conditions for rentals.

In September, we started to see things taper off a little bit. We didn't see the same heated month over month growth or rents that we did during June, July and August. I think the market took a little bit of a breather after rents surged so quickly. But looking at the October data, even though demand seems to have slowed visa vie where it was in the summer, rents continue to trend higher. And that was pretty much the case right across the country. We're just putting the final touches on the Rentals.ca network monthly report, it showed that rents are rising still at a double-digit pace on an annual basis. So, up about 12% year over year for the country.

Within Toronto, you have rents up by more than 20% from where they were at this time last year. A lot of the big markets across Canada are seeing similar types of growth. So, these areas that are experiencing strong population growth, sharp erosion and homeownership affordability, are seeing very strong rates of rent inflation, to the point now where if you look at the average rent and a market like Toronto or Vancouver, you're getting close to $3,000 a month in average rent. It's very expensive. And rents are growing basically at twice the pace of incomes. So, it's creating an affordability challenge for the market.

So, when you're starting to see demand slow, it's because of resistance to current rents. You don't have as many people able to afford rent levels, there's not going to be as much leasing activity in the marketplace and then you start to see more roommate situations, people moving into less expensive property types or less expensive areas of the market, similar to what we were seeing in 2019. So, these sort of trends are coming back again, as the market reaches really unaffordable rent levels.

[00:15:04] MS: It's beautiful to have an economist with us, because I don't think I could have summarized that any better. But from the demand side, because we do monitor that quite carefully in terms of the number of rental prospect inquiries per property, that per each property that has an availability or available unit, we have seen a pretty sharp decline started in September, even sharper decline in October. Now, it's very difficult to look year over year at the numbers because of all the noise that the pandemic created. When we look even further back, though, three, four years into the past, and we compare what is normal around this time of year, because rental demand always drops off after the summer, usually through to the end of December, and then picks up again slowly in January, February, and really picks up in March.

But this year around, we're seeing that demand fall off in excess of what was normal three, four years ago, pre-pandemic levels, and it was always pretty consistent. You'd sort of see a three-month trend, fourth-month trend into December, after summer of 10%, 15% decreases month over month and demand. But now, it's a little bit higher, 18%, 20% month over month decreases. And you'll see that in our demand report. I think it's being published actually today. But I guess this podcast will be released a couple of weeks from now. So, you will have already seen it in our demand report.

But yeah, I think that's mainly due to price exhaustion. As Shaun sort of described, is when rents get this high, less and fewer and fewer people can afford those rents, and they look for other creative solutions. Maybe if it's a young renter, they stay at home, another year, they make the decision to stay at home. Maybe if it's somebody with a roommate, they decide, “Okay, this is not the year that me and my roommate split off into our own units.” If it's an immigrant family, maybe they're deciding that they're going to rent with someone else, or roommates or another immigrant family, and so we do start to see those sorts of behaviours in response to unbelievably steep price curve that we've seen.

[00:17:25] MH: Right. So, speaking of rental rates, Shaun, is this increase in rent sustainable?

[00:17:30] SH: No, it's very abnormal for rents to rise in double digits. And when they're growing this much faster than incomes, it certainly isn't sustainable. It's interesting. When you look at rent growth in Toronto over the last 10 years, in nominal terms, it's been basically the same as the growth in renter household income. We've recently received new data through the census on renter households effectively showing that renter household incomes have increased by 50% over the last 10 years, so it's been pretty strong. And that's basically the same level of rent growth that the markets experienced during the same period of time.

But there comes a point where rents are rising faster than incomes that it begins to erode affordability, which is what I think what is happening right now. What's difficult to sort of quantify though, is the impacts on incomes that fewer homebuyers active in the ownership market, are having on the rental market. So, if you're a higher income individual that would otherwise have bought a home, and let's say you're earning, $100,000 or $150,000 a year. And because of the increase in interest rates and how high prices are, you're no longer able to qualify to buy or you're just averse to buying because of the current market context. That's a higher income individual that's looking to rent. And they're going to probably not push their budget to the max. But they're going to want higher quality property to some extent that's being serviced through new purpose-built rental apartments, but nowhere near to the quantity of demand that's coming into the marketplace.

So, one of the interesting stats that came through in the census was that the number of renter households in Toronto that earn $100,000 or more a year has basically doubled in the last 10 years, and represented like 90% of the overall net renter household formation that's occurred in the city during the last decade. So basically, what they’re saying is that almost all of the net growth and renter household demand that's occurred in the last 10 years has come from higher income earning individuals. So, these individuals, by definition, are able to afford the average monthly rent. If the average monthly rent right now is about $2,800 a month in Toronto, if you're earning $100,000 a year, that's less than 30% of your gross income. So, that's my definition of affordable.

But as rents continue to outstrip growth and income, obviously this begins to weigh on affordability. So, I think we're starting to reach those resistance levels in particularly with the economy expected to enter a slowdown into 2023, I think it's reasonable to assume that the more recent rates of rent inflation that we've been experiencing is going to taper off. One because, we're not comparing ourselves to pandemic related decline in 2021 anymore. So, that base effect isn't as strong. And two, the moderation and growth coming from a reduction in affordability and a slowdown in the economy. Generally, when the economy slows down, you do see a bit of a rise in vacancy and a bit of a moderation in rent growth, so I don't think it's unreasonable to assume that’s going to happen again next year.

[00:20:42] MH: Now, these increase in rents, you touched on growing incomes, we've touched on quality a little bit, how would you attribute the increase to rents? Is it lack of supply, competition, quality, growing incomes? Or is it a combination of the four?

[00:20:56] SH: It's a combination of all. But I think fundamentally, rental supply hasn't been anywhere near the level of rental demand in this country, generally, for the last 20 years. And now, we're seeing what the impact of that is. We build very few new purpose-built rentals in Toronto relative to the number of new renters that are forming on an annual basis. Almost all of the new rental supply that comes in comes from condo rentals. What we've come to learn is that it's been insufficient to satisfy demand. We need more traditional, purpose-built rental to fill the gap.

We were actually seeing prior to 2021, a pretty significant increase in new construction of purpose-built rentals, which was very promising. It wasn't going to impact the market overnight. But in time, as these units were being built, the expectation was that it was eventually going to help to promote affordability and create some balance within the marketplace. We've had over 7,000 rental construction starts in the GTA last year, which isn't enough to satisfy demand and that gap in supply, but it was it was definitely a step in the right direction.

But this year, in the year to date period, to Q3 2022, we've seen a more than 70% drop off in rental construction starts. And in fact, over the last two quarters of the last six months, I think we've seen two rental projects start construction. There’s been so many projects put on hold because of high construction costs, high development charges, HST, labor resource constraints, and the fact that rents aren't at a level today, even with the growth that we've experienced, aren't at the level today that make it economically feasible to build. Virtually, anywhere you look in the GTA, a builder needs at least $4 square foot in rents today, in order for the project to make sense. This could be in Scarborough, it could be York region or Durham Region. It doesn't have to be written downtown Toronto because of where costs are. And there's just not a lot of projects out there that can work at this time.

So, I think there's, for the first time, not only a lot of recognition that we are building up housing supply, but I think more attention being paid to rental as a form of rental supply or a form of housing supply in general, that will help to eventually promote housing affordability, right? If the average household income required to buy the average priced home in the GTA is around $200,000, you need to start building something where you know that average income required to get into the market is much lower. And for rental, that is the case.

So, rental is really the de facto new housing supply that's become affordable, even at today's higher high market rates, definitely is a combination of a bunch of things. But I think if you looked at what's happening in terms of the trends for construction this year being down 70% plus, and then understand that the government is targeting 500,000 new immigrants by 2025, you can see where this is going, right? Supply is not going to keep pace with demand. And even if we do hit a little bit of a hiccup in 2023, because of a short-term slowdown in the economy. In a few years time, the situation as it stands today is going to look even worse.

[00:24:13] MH: So, you're talking about the economy a lot and hate to throw out the R word, but recession is on the horizon. So, that's both of you. In your opinion, what typically happens to the rental market during a recession? Do you believe we're heading down that same path with worsening conditions that you just touched on?

[00:24:28] MS: Yeah, I mean, it depends on what's worsening for. But to Shaun's point, what we're seeing in terms of a drop-in demand, and perhaps price exhaustion and prices, maybe not increasing at the rate that we saw through summer, is probably relatively short term. Is probably the length of whatever economic downturn we do sustain. So, if it's a six-month recession or a one-year recession or a two-year recession, that’s probably the length of the impact that perhaps there will be some heightened vacancy or price flattening in the rental market.

But the long-term trend here isn't great for renters from a healthy market standpoint, especially given that we're building 70% less rental housing, purpose-built rental housing this year than we were last year, as Shaun just mentioned, and we've got an immigration policy that's extremely aggressive. It's the most aggressive in Canadian history, targeting 500,000 new immigrants a year. So, it's just simple math that long-term, once we begin to recovery, that we're going to have a supply demand issue.

[00:25:42] SH: Yeah, I agree with what Max just said. I think if you look back over the last 30, 40 years of recessions, normally you would see vacancy rates rise by about a percentage point during those recessions, so it's nothing major. And again, that sort of coincides with a rise in unemployment. I think the situation now is considerably different than in previous downturns, and that not only are we starting this off with near record low unemployment, we’re around 5% or so. There's also a record level of job vacancies. And I think that's going to provide some cushioning on the labor market, and its impact on housing demand generally, as we move through 2023.

I don't think most employers plan on laying off workers. It's happened in some sectors to some degree, but most are probably just going to freeze hiring. So, the employment level still stays at a record high, but the unemployment rate rises, because there's obviously more people coming into the city, more people coming into the country looking for work, but it doesn't necessarily lead to a reduction in overall housing demand. And this is happening again, because of a couple of unique circumstances. One, we're targeting record high immigration, and also the sharp reduction in homeownership affordability.

Even you look back to the early ‘90s, which was a particularly deep and prolonged recession, vacancy rates in Toronto never rose above two and a half percent. They were still low. People weren't buying homes. Housing affordability was just as bad, nearly as bad as it is right now. And people were looking for rental apartments and the vacancy rate reflected that. So, I think that's something to understand as well, that were a very, very undersupplied market. And even if some slack opens up because of a short-term dip in the economy, it's not going to have that much of an impact on the overall market.

If anything, it starts to slow down the supply chain, right? We've seen that happen very clearly, with rental construction starts, we're seeing it happen with condo project delays as well. Projects aren't launching that were supposed to launch this year. And with fewer construction starts and fewer condo project launches, in four to five years time, you're going to see a very, very sharp disruption in new apartment deliveries. That's going to be happening at the exact same time as immigration reaches new heights.

So, I'm not too worried about a little bit of reprieve for the market in 2023. We are actually going to see a short-term jump in supply next year as well. So, we're going to have quite a number of new rentals reaching occupancy. But more importantly, we're going to have about 30,000 condos reaching completion. So, there is going to be more supply coming in and perhaps a bit of a levelling out in demand because of the economy. But again, I think Max and I both agree, this is a short term pause for the market and the long-term trajectory is still very much on an upward trend.

[00:28:42] MH: Speaking of that short-term pause, let’s go to you Max, from a marketing perspective, what kind of advice would you give to property owners, developers, or other marketers how they might prepare themselves for this short-term pause?

[00:28:56] MS: Yeah, a lot of our clients and listeners do live more in the day to day and week to week cycle. Their professions are more dictated by, “Okay, how many leases were signed this week, or how many leases were signed this month.” So, it is important, still, to look to your overall marketing strategy and adapt it for this change that's occurring. Lower demand. Interesting to hear from Shaun that he's expecting sort of a supply blitz, call it, in – when was that, Shaun? Spring, did you say?

[00:29:29] SH: Well, we're expecting to see – to sort of back up a bit. We have almost 100,000 condos under construction in the GTA. Traditionally, about half of those end up in the rental pool. So, these would be presale investors who buy and then hold their properties at closing. So, you know, with a higher level of completions next year, you can expect that there's going to be more investor health rental units coming into the marketplace.

It may not be to the same quantity as it has in the past, because of higher interest rates and high holding costs relative to rent levels, may not encourage as many investors to hang on to their properties for as long as they have. But nonetheless, I think we're still expecting to see a rise in supply. I wouldn’t say it's a blitz. We're coming off with very low levels of supply to begin with. But I think for a little while, it's going to feel like there's more rental supply, but that's going to be short lived.

[00:30:16] MS: Yeah. So, if there is that feeling while we're still in a downturn with lower demand, our client base and your average marketing manager for a property management company, landlord, rental housing company, it's probably got to go a little bit more back to the basics, in terms of just exposure, ensuring that your property is everywhere, that you're chasing the most efficient lead sources in the market. So, of course, ILS advertising, your own website, digital. As we move out of that period, into a recovery, and once again, into an extremely low supply environment, which arguably was sort of summer. You then kind of refocus on those strategies that are more around yield optimization, and getting the absolute most on every turnover, that does come available.

Of course, that is sort of what has led to sharper price increases in the market over the last year, because that's where marketers are focused with lower supply, leasing teams, and marketing teams have the ability to push rents and increase the value of, ultimately, the real estate asset, via pushing rents and using marketing as a tool to do that, versus just fill vacancies. So, that shift will come again. But right now, we're a little bit more back to the basics and less around using marketing as a source to push rents.

[00:31:47] MH: Definitely. Shaun, I’m going to throw the same question to you, but as the economist in the room, from an economic financial standpoint, any advice to property owners, developers, for the next few months?

[00:31:57] SH: I would say we probably can't be expected to see the same surprises to the upside on rents as we've seen in recent months. I've been shocked, quite frankly, at some of the rents that I've seen at a few of the new rental projects that are coming up for occupancy. I did not expect to see rents getting in around the $5 per square foot range in today's marketplace. I thought that was something that was perhaps going to come in a couple years time, but it seems like we’ve brought forward some rent growth into the current period given what's happening in the world.

So, I would say be a little bit more conservative in your expectations for where rents are going to be in the next six months, just because of how high they have risen in the last several months. Again, we're bringing forward some of that rent growth in today's market and borrowing it a bit from the future. I would say in the medium term, there's some important socio-economic shifts that are happening that are going to create some changes in the rental market. We're seeing the aging of the millennial generation into their family formation years. For the first time, you're seeing that homeownership rates for those that are in the 30 to 40 range are falling below 50%. Most households that are forming families are renting and they're going to need the type of rental supply that suits their needs.

So, more family sized units, more rentals in community areas. We're also seeing more down-sizers choosing to rent. And these are obviously individuals that have higher incomes, they can afford larger suites. I think most of the resistance is going to come from the lower end of the market, younger professionals, young adults that are getting their first job and having difficulty finding a rental unit that they can afford. But there's a segment of the population right now that is higher income and requiring an upgrade in terms of their rental situation.

So, realizing that demand is shifting into that sort of 30 to 40 age bracket, and people are looking to start families and they're not finding what they need in terms of new supply by and large, because most of the condo rentals are studios and one bedroom. We do tend to see a more diverse mix of units within new purpose-built rentals. But again, there's just not enough of them to satisfy that level of demand. So, I think there's some short-term changes in the market that are going to happen, because of economic circumstances. But I think over the longer term, the demographic outlook is telling us a very, very interesting story about demand for rental units across a variety of different sectors of the population.

[00:34:28] MH: We're just about to wrap up here. Thank you both so much for the time today. It's been very informative. We've touched on a lot of different aspects of the industry. I know we touched on a rental report earlier. Shaun, why don’t you tell the listeners where they can access the rental report and what they might be able to take away from it this month?

[00:34:48] SH: The rental report will be on the Rentals.ca website. So, this is a bit of a change in the report and that we're amalgamating data from more than just the Rentals.ca website alone. We’re including some other websites that are part of the Rentals.ca network. So, it's a larger data set than it has in the past. That data is going to show similar trends to what we've been reporting for the last number of months showing, exceptionally strong rent growth. A lot of growth regionally across the country coming from areas that have been experiencing the largest amounts of population growth. This is the first time that that we've written up the report. So, it was interesting to get sort of a cross country view of what's happening and step outside of just Toronto to see how fast rents are growing in Atlantic Canada, for instance.

If you look at population growth, these are sort of the provinces that have experienced the largest population inflows over the last couple of years. Ontario is still very strong. But you're also seeing very strong rent growth in Alberta as well. So, Alberta is starting to take off in terms of its rental market, and then markets like Quebec are actually seeing rent start to slow down. So, these are markets like Montreal that tend to build more rental supply, and markets like Toronto and Atlantic Canada, BC as well typically don't build anywhere near the level of per capita demand that is required. And so, that's coming through very clearly in the rent inflation statistics.

[00:36:14] MH: Awesome. So, make sure you go and check out Rentals.ca if you want to access that report. As Max mentioned earlier, the Rentsync Demand Report will also be out as time you're listening to this. And if anyone's looking for more information on the Urbanation and Rentsync partnership, make sure to check out both websites, follow us on social media for any future updates. We do have a landing page where you can subscribe to join our waiting list. That way you're first to get any new information. Again, Shaun, Max, thank you so much for the time today.

[00:36:43] MS: Yeah, and you can also just reach out to either your rep at Urbanation or your rep at Rentsync, and they can make sure that your first to know when things go live, which many, many clients have been doing. So, that's really exciting to see that looks like we're going to have a lot of subscribers right away. So, yeah, thanks for having us. Appreciate it, man.

[00:37:04] SH: Thanks so much.

[00:37:04] MH: No problem. Have a good day everyone.

[00:37:07] ANNOUNCER: You’ve reached the end of another episode of Sync or Swim. Make sure to visit us at rentsync.com/podcast to access show notes, key takeaways, and where you can sign up to our newsletter to receive free bonus content. If you found value in the show, please also remember to rate, review and subscribe. Don’t forget to join us next week for another episode. Thanks for listening.