Demand Trends for the Canadian Market:
Demand trends for the first time this summer rebounded with the number of active renters growing across the country in July. Typically July would mark the peak of rental activity across Canada with rental demand trending upwards beginning in March and continuing to climb into July and in select markets peaking in August. This year has bucked the trend with rental demand declining for three consecutive months from March to June. The uptick in July returns rental demand to roughly the levels experienced this past March. Not enough to rebound and make up for the loss in leasing activity it nonetheless remains a positive indicator for rental demand trends going into the second half of the year.
Nationally, across all available markets, active prospects increased by +7.3% month-over-month, while active properties declined by -0.7% monthly. Concurrently active prospects submitted +2.1% more leads than the previous month which resulted in the average number of leads per property increasing by +10.4% monthly. This is a positive indicator of ongoing rental demand and offers some well-needed relief to properties experiencing depressed rental demand.
Year-over-year comparisons continue to paint a picture of decline, with the total number of active prospects down -34.3% nationally. The one caveat is that while the number of renters may be down, those who remain on market are more active than ever before and, are submitting on average +7.7% more leads than the previous year.
The lack of affordable housing has driven many prospective renters to remain in place and forgo a move. However, not all are impacted and many households whether by choice or necessity are returning to the rental market and driving up demand in the final stretch of the summer months.
In the following sections, we identify notable changes in rental demand, highlight market-specific trends, and discuss what the coming months may look like for the rental demand in Canada.
Top Canadian Cities in Demand
Notable Changes in Demand Over the Past Month
Demand scores are up month-over-month across the top 40 markets +7.6%, with prospects increasing by +7.5%, and properties declining by -0.1% from June. All market segments experienced an uplift in July with the largest and most populace communities seeing the greatest gains. Our top 10 markets in rental demand saw a more dramatic shift with active prospects up +11.2% month-over-month. For the first time this summer, we see growing rental demand. Concurrently active properties in our top 10 markets increased +1.1% month-over-month, which further suggests that not only were more renters actively searching for new accommodations, but that many may have also moved. This would allow additional units to turnover and return to the stock of available rental units; lessening downward pressure on supply while adding additional demand into the mix.
Month-Over-Month (M/M)
- Primary: Demand scores are up +9.8%
- Secondary: Demand scores are up +4.6%
- Tertiary: Demand scores are up +4.4%
Month-over-month (M/M) National demand scores were up 7.6% in July 2024 compared with June 2024. Rental markets saw much-needed relief with demand trending upwards for the first time this summer leasing season.
Notable Changes in Demand Over the Past Year
Annual demand comparisons show a stark decline in demand in 2024 relative to 2023, with the overall number of active prospects down -36.6% year-over-year, and active properties down -8.6% annually. Overall demand score comparisons show a -2.6% decline however this does not paint the full picture of the ongoings in rental demand as it discounts the long-term shifts in renter activity and results in inflated year-over-year demand score comparisons.
Year-Over-Year (Y/Y)
- Primary: Demand scores are up +0.8%
- Secondary: Demand scores are down -25.6%
- Tertiary: Demand scores are up +6.1%
Year-over-year (Y/Y): Within our top 40 markets demand scores are down -2.9% in July 2024 compared with July 2023. Real demand by renters has declined year over year with total leads down -29.3%. However, the renters who remain active in the market are submitting more leads with the average number of leads submitted up +7.7% year-over-year.
An Analysis of Key Canadian Markets
To provide a more detailed analysis of the rental demand in specific markets across Canada, we have segmented our market data into 3 key market segments.
- Primary (Populations Over 600K)
- Secondary (Populations Between 235-600K)
- Tertiary (Populations Between 100-235)
Examining these market segments individually offers a deeper understanding of demand patterns within larger population centers, and allows us to identify trends across markets.
Primary Markets (Populations >600K)
Primary Market Drill Down (M/M): July 2024 vs. June 2024
Notable Changes in Primary Markets Over The Past Month
*Overall demand scores are up +9.8% month-over-month, unique prospects are up +8.2%, and properties are down -1.4%.
Primary markets saw the greatest monthly growth amongst the tracked market segments. Most notably Vancouver +30.4 and North York +19.4% saw the largest single-month increases in overall prospect counts. In addition to these communities several GTA markets including Toronto, Scarborough, and Mississauga all saw growth in their overall demand scores due in large part to declining property counts and increasing prospect counts which drove up overall demand scores within these markets by an average of +16%.
Primary Market Drill Down (Y/Y): July 2024 vs. July 2023
Notable Changes in Primary Market Demand Over The Past Year
*Year-over-year demand scores are up +0.8%, prospects are down -37.6%, and properties are down -13.3%.
Year-over-year market comparisons show greater and more dramatic shifts in overall rental demand for primary markets as we delve further into the summer months. With 2023 experiencing peak rental demand in July, this year's relatively flat demand trends show just how dramatic the decline in rental demand has been during peak season. While the overall trend is of dramatic decline, not all markets were affected equally with Winnipeg and Edmonton which represent the two most affordable primary markets experiencing a decline in prospect counts of -10.5% and -19.7% respectively which are substantially below the overall average of -37.6% for primary markets.
Secondary Markets (Populations ~235-600K)
Secondary Markets Drill Down (M/M): July 2024 vs. June 2024
Notable Changes in Secondary Market Demand Over The Past Month
*Secondary markets demand scores are up +4.6% month-over-month, unique prospects are up +8.0%, and property counts are up +3.3%.
Secondary markets saw similar growth in prospect counts to primary markets however the increase in property counts limited the overall benefit this increase in rental demand would have to markets as both supply and demand moved in the same direction. While the average shows increasing demand, Halifax -38% and Victoria -4.7% both saw declining prospect counts in July. Surrey took the top spot from Oshawa which fell out of our rankings due to not meeting the minimum number of active properties for July. Additionally, Etobicoke took the number two spot in our rankings with Halifax dropping into fifth.
Secondary Market Drill Down (Y/Y): July 2024 vs. July 2023
Notable Changes in Secondary Market Demand Over the Past Year
*Overall, year-over-year demand scores are down -25.6% year-over-year, with prospects down by -42.7%, and properties up by +7.9%.
Secondary markets have fared the worst out of our tracked market segments through a combination of dramatically declining prospect counts and growing property counts. This has resulted in the average number of prospects per property declining by -46.8% which is the highest of any market segment. These markets may show dramatic annual declines however as renters continue to look for alternatives to unaffordable primary markets many are driven to secondary communities which offer improved affordability while maintaining strong accessibility.
Tertiary Markets (Populations ~100-235K)
Tertiary Markets Drill Down (M/M): July 2024 vs. June 2024
Notable Changes in Tertiary Market Demand Over The Past Month
*Demand scores in tertiary markets increased by +4.4% month-over-month, unique prospects are up +3.1%, and available properties are down -1.3%.
Rental demand in tertiary markets is increasing at a slower rate relative to larger market segments. The fastest growing markets as determined by the monthly growth in active prospects include Sudbury +37.7%, Abbotsford +11.4%, Saskatoon +9.9%, and St. Catharines +7.4%. These communities with the exception of St. Catharines have all seen their average prospects per property increase monthly suggesting tighter market conditions and greater overall rental demand.
Tertiary Markets Drill Down (Y/Y): July 2024 vs. July 2023
Notable Changes in Tertiary Demand Over the Past Year
*Overall, year-over-year demand scores are up by +6.1%, unique prospects are down by -27.7%, and available properties are down -4.6%.
Overall demand score comparisons do not adequately reflect the ongoing shifts of rental demand within tertiary markets. While some of these markets have experienced historically high rent growth over the past year, active prospects continue to trend downwards as fewer people move, with a greater number choosing to remain in place and forgo market rent increases. In the long term smaller more affordable communities will experience more favourable conditions with renters less wary of moving given the lower cost of living.
Conclusion
July marked a departure from the trends experienced over the past 5 months with a noticeable rebound in rental activity across the country. After 4 consecutive months of declining rental from March through June 2024, July saw the number of active prospects grow by +7.3% nationally. This signals a positive shift in a summer that has otherwise been characterized by unseasonably low rental demand and leasing activity. This single-month uptick returns overall prospect counts to just above the levels seen in March 2024 before the summer-long decline. Although most of the summer has come and gone this is an encouraging indicator as we head into the second half of the year which would typically see sluggish rental activity and declining demand.
Despite the monthly improvement, year-over-year comparisons continue to paint a sobering image with active prospects down -34.3% nationally. While there are fewer active renters on market, those who remain are more active and submit on average +7.7% more leads than the previous year. This suggests that while the pool of active renters have shrunk, those who remain are more motivated and are driven by a pressing need to secure housing despite the ongoing challenges of affordability.
The trend of declining rental demand over the past year has not occurred in isolation. Contributing factors include decreased affordability, rising cost of living, and a long-term shortage of rental housing construction across much of the country; which has resulted in less variety and worsened affordability. Renters as a result have become more cautious, and selective when making housing decisions and in some cases have left their cities, regions, and, provinces in search of greater affordability and new opportunities.
As we move forward into the year, it is clear that conventional wisdom as it relates to rental demand may not apply. The summer leasing season is nearly over placing property owners and managers in a more competitive environment. The tide has turned and we are now well into a renter’s market. Moving forward leasing professionals must stay vigilant, monitor listing performance, and adapt to evolving market trends to maintain healthy lead flow and attract quality tenants in a market where every lead counts.
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 Burnaby, BC received a demand score of 6.7 this month, versus 4.9 last month. Burnaby experienced a 1.8 increase in its demand score.
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 demand scores in Burnaby, BC increased +38% in July 2024 versus June 2024. The year-over-year demand score in Burnaby increased by 1.7 points representing a 36% increase from July 2023.
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, Burnaby, BC achieved the top spot on our Top Canadian Cities in Demand rankings while it was not included in last year's rankings due to not reaching the required minimum property count.
*This report provides month-over-month rental listing data for June 2024 versus May 2024 and a year-over-year comparison from June 2024 versus June 2023. It also outlines the month-over-month and year-over-year trends in primary, secondary, and tertiary markets.
