Rentsync Blog

Rentsync National Rental Demand Report: June 2022

Written by Team Rentsync | June 14, 2022 at 4:00 AM

Executive Summary

In this comprehensive national rental demand report, we outline significant changes in unique leads per property across Canada. The data presented here is the largest data-backed analysis of rental market demand in Canada using aggregate ILS data (over 20 rental listing sites).

The data included in the Rentsync National Rental Demand Report can be used to compare and contrast demand and lead volume for the properties you manage within a given city and will allow you to make more sound decisions on marketing and advertising.

As you observe demand and unique lead volume percentage, it's possible to measure this against your own metrics, and see whether you are in line with current industry trends, and if not, how to pivot your strategies as a result.

Methodology

To present this data, Rentsync has determined three key calculations for each area of the report, they are as follows:

Demand Score: Our demand score is rated out of 10 (with 10 being the highest score a city can receive), and is calculated based on unique leads per property, per city, and compared against benchmark data. 

For example: If Surrey, BC received a demand score of 10 this month, versus 8.6 last month. Therefore, Surrey experienced an increase in its demand score by 1.4 this month.

Demand Percentage (% +/-): This is determined according to the year-over-year (YOY) or month-over-month (MOM) increase or decrease in unique leads per property.

For example: The month-over-month unique leads per property in Surrey, ON went up 16% in May versus April. In May 2022, the year-over-year Demand Score in Surrey, ON went up 3.8 points based on an increase of 62% unique leads per property compared to May 2021.

Position: The position is determined by unique leads per property, with cities that have at least *20 properties or more. The position will vary depending on demand.

For example: This month, Surrey, BC moved up 1 position to the top spot on the Top 40 Canadian Cities in Demand. Year-over-year Surrey, BC continued to remain in the #1 spot since last year.

*The following report provides month-over-month rental listing data for May 2022 versus April 2022, as well as a year-over-year comparison from May 2022 versus May 2021. It also outlines the month-over-month and year-over-year trends in primary, secondary, and tertiary markets.

Key Takeaways:

Month-over-month (M/M): May saw growth in rental interest with an increase in prospects by +6.4%, a decrease in available properties by -2.5%, and as a result higher per property lead volume of +9.1%. This was experienced across markets of all sizes and suggests a further tightening of market conditions and competition as the supply of properties is not able to keep pace. The greatest growth was seen in primary and tertiary markets, while secondary markets experienced minimal movement month over month.

Month-Over-Month (M/M)

  • Primary: Demand scores per property saw no change this month.
  • Secondary: Demand scores per property are down -4%
  • Tertiary: Demand scores per property are up +1%

*Back from April's slump, Whether it was the warming weather or the ever-growing barriers to homeownership; more people are driven to rentals for their shelter needs. This creates an environment where the population of renters is likely to continue accelerating creating further strain on an already tight rental market.

Year-over-year (Y/Y): Overall, in Canada, our multifamily demand score shows an increase of +72.6% in May 2022 versus May 2021. Although overall demand figures are up; both prospects -37.4% and available properties -39.5% are down respectively. The loss in prospects is primarily due to the loss of Facebook marketplace as a source of property leads, while a reduction in property availability is simply a result of strong leasing activity and a subsequent reduction in vacancies. We are unlikely to see a resurgence in market conditions similar to those in 2021 due to the normalization of leasing conditions, and the subsequent tightening of vacancy rates. Overall, the year-over-year (May '22 vs May'21) market snapshots are as follows:

Year-Over-Year (Y/Y)

  • Primary: Demand scores are up +89% 
  • Secondary: Demand scores per property are up +75%
  • Tertiary: Demand scores per property are up +25%

*The year-over-year analysis indicates that rental demand has maintained an upward trajectory as markets stabilize and enter the annual leasing season.

Top 40 Canadian Cities in Demand

*Demand is determined by calculating unique lead volume per property by market. Due to a decrease in available properties in the rental housing market, this report will only highlight the top 40 cities in Canada based on our threshold that requires at least 20 properties to be included in our data sample.

Prospects have declined at approximately twice the rate of properties which has resulted in a severe reduction in average lead volume per property.

Much of the growth experienced throughout the pandemic attributed to the relocation of many households has receded indicating that some of the appeal which had initially attracted households was not able to hold renters long term. Although month-over-month renters continue to grow the long-standing trends within these communities have come to an end with many preferring larger and better-amenitized markets when making housing decisions.

Conclusion

An increasingly complex housing market in combination with a seriously undersupplied rental market creates conditions for what will likely be the most competitive leasing season in recent memory. Although demand has varied over the last 3 months, the general trends amongst prospective renters paint the picture of a rental market under strain.

Instead of additional inventory becoming available we have a reduction of new units entering the market due to many of the construction delays experienced throughout the last 2 years. This in combination with an ever-increasing number of households turning away from home ownership creates a scenario where we are likely to see a continued tightening of vacancy rates from what is already an all-time low.

The current preference for larger multi-bedroom units will likely become more prevalent as more households are pushed out of home ownership due to increasing interest rates and the already high requirements for mortgage approval. Many of these households would have otherwise lived in larger single-family homes but are left to compete for a smaller supply of family-oriented rental properties. 

May 2022 marks what is likely the start of more serious tightening in market conditions, caused by less affordable homeownership opportunities in major markets. This will likely persist as inflation increases, and house prices grow at a rate 41.9% faster than incomes since 2015. Therefore, this leasing season will be the busiest and most competitive in recent years, and multifamily marketers should ensure that their properties are well positioned so as not to miss out on the growing competition for high-quality apartment homes, which may incur the longest renter tenure seen in recent history.