ADAM MILLS REALTY

As the Housing Market Cools, Rent Heats Up

In a report released by the Canadian Real Estate Association (CREA) in July, figures confirm that rising interest rates are dragging down the ownership market. Home sales have been actively trending downward since April of this year, reaching a 24% year-over-year decrease in June. 

Since housing is a supply and demand game, cooling in one market means another is heating up. Decreased demand for home ownership means a drastic increase in people entering the rental market, which allows landlords to hike prices to match the demand. 

In 2020 we saw a sharp decrease in demand in the rental market, specifically in metropolitan areas. People were fleeing from cities and taking advantage of the real estate market’s price drops and low-interest rates, leaving landlords no choice but to lower prices.

Now, we’re in the opposite position. 

In June, the average rental price for all Canadian properties hit $1885, up almost 10% compared to last year. In Ottawa last month, the average rental price for a 1-bedroom unit was $1692, up 5.52% from last year, according to rentals.ca

Demand in Ottawa may be slightly lower than in other metropolitan areas like Toronto & Vancouver. Still, we’ll likely see an influx in activity in the rental market come the fall. Students will be returning, looking for accommodations, and interest rates that buyers had locked in this June will expire, forcing unsuccessful buyers to move back to the rental market.

If you’re entering the rental market, here are a few tips to help guide you through this process:

  1. Research & explore neighbourhoods. If you’re new to a city, getting a sense of the various areas and communities is essential to finding the best fit for you. Using online resources will suffice if you can’t explore in person, but we always suggest taking some time to explore neighbourhoods when visiting properties.
  1. In Ontario, landlords and tenants are protected by the Residencies Act outlined by the Landlord & Tenant Board. Understanding your rights as a tenant is fundamental to your success. There are regulations to ensure you are not discriminated against. If you feel you’ve been discriminated against when applying to rent a property, you can submit a complaint to the Ontario Human Rights Tribunal and may be entitled to damages.
  1. Be prepared to pay the first and last month’s rent upfront. Landlords in Ontario have the legal right to ask tenants to pay first and last month’s rent upfront, so budgeting for that is crucial. 

Many people don’t realize that you can (and should) work with a realtor when searching for a rental unit. When the rental market heats up, we see multiple offer situations on units. Just like we saw in 2021 in the housing market, we’ll start to see rental properties (especially those listed at affordable rates) ignite bidding wars. A realtor can help you navigate through this process, vet landlords, and provide in-depth knowledge and information on the neighbourhood and the building itself if you’re looking at condo units. 

While working with a realtor can help ease the stress and confusion of searching for a property to rent, we still strongly recommend educating and familiarizing yourself with the basics of rental agreements.

Just like when you’re looking to buy property, working with a realtor comes at no cost to you. All commissions come from the landlord. Contact us if you’re looking for a rental property in the Ottawa area! We work with both renters and landlords frequently.