Demand Trends for the Canadian Market:

August represents the first month of declining rental demand post-summer peak and shows the largest month-over-month drop in unique prospects of 2024. This summer leasing season was unseasonably slow with renter demand continuously declining; with only a single month of growth in July returning rental demand to just below the levels last seen in March 2024 which would typically represent the last month of slower rental demand pre-summer run-up.

The decline in August rental demand while representative of expected trends is nonetheless unseasonably high with active prospects down 10.6% nationally, and down -9.8% across our top 40 markets month over month. Current active prospect counts are roughly in line with those seen last in February however with fewer active properties than in February thus suggesting that overall rental demand has grown from February.

The gradual decline in property counts suggests that units are being absorbed into the market. However, the lower relative decline in properties -1.8% as compared to the decrease in active prospects -10.6% suggests that many more tenants are leaving the market without having successfully leased a new unit. Potentially further suppressing turnover rates and keeping more units out of circulation. This year has seen renters become more selective due to changes in renter motivations, and more active with average leads per prospect up 3.4% year over year; which has resulted in greater competition amongst properties for the limited population of active prospects.

Whether due to a lack of variety or affordability, many prospective renters are choosing to remain in place, resulting in declining prospect counts, depressed rental demand, and a changing landscape for rental housing providers.

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 have resumed their decline in August with active prospect counts down -9.8% month-over-month across our top 40 markets, active properties are down -2.1%, while demand scores as a whole are down -5.5% monthly. All market segments experienced a drop in active prospects, while tertiary markets were the only segment which saw growth in property counts. The top 10 markets in our rental demand rankings saw a more moderate shift with active prospects down -6.8%, while properties are down -2.1% resulting in overall demand scores declining -2.2%. With a combination of declining prospects and properties we see that while units continue to be leased up, a growing number of prospects are now ending their rental search early without having successfully found a new unit. This has the potential to apply more pressure to properties by creating more competitive market conditions for properties.

Month-Over-Month (M/M)

Primary: Demand scores are down -3.6%
Secondary: Demand scores are down -10.1%
Tertiary: Demand scores are down -5.7%

Month-over-month (M/M) National demand scores were down -5.5% in August 2024 compared with July 2024. Rental markets saw declining rental demand once past the July peak.

Notable Changes in Demand Over the Past Year

Annual demand comparisons show a sharp decline in demand in 2024 relative to 2023, with overall prospect, counts down -40% nationally year-over-year, with active properties down -10.2%. This annual comparison is further exacerbated by an outsized decline in demand in August 2024 which declined -10.6% monthly, as compared to August 2023 which saw a -2.1 % decline in monthly prospects. This suggests that we are seeing a combination of long-term shifting in demand trends, alongside a more substantial decline in seasonal trends this year.

Year-Over-Year (Y/Y)

Primary: Demand scores are down -5.7%
Secondary: Demand scores are down -34.4%
Tertiary: Demand scores are down -11.3%

Year-over-year (Y/Y): Within our top 40 markets demand scores are down -12% in August 2024 compared with August 2023. Active prospects are down 41.9% year-over-year, while properties are down -10.7%.

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): August 2024 vs. July 2024

Notable Changes in Primary Markets Over The Past Month

*Overall demand scores are down -3.6% month-over-month, unique prospects are down -9.5%, and properties are down -6.0%.

Primary markets experienced trends in line with the national average, while also showing the greatest monthly decline in properties likely due to stronger leasing activity which resulted in more properties coming off-market. Toronto, Calgary, and North York all achieved substantially lower than average declines in prospect counts (-4.95%, -2.78%, and -2.64% respectively), while Toronto and North York were the only two communities which saw average prospects per property increase by an average of +2%.

Primary Market Drill Down (Y/Y): August 2024 vs. August 2023

Notable Changes in Primary Market Demand Over The Past Year

*Year-over-year demand scores are down -5.7%, prospects are down -40.7%, and properties are down -15.1%.

Annual comparisons show that primary markets saw the greatest year-over-year decline in active properties relative to other market segments. This is a positive indicator and suggests that the -40.7% decline in active prospects was not solely related to renters choosing to terminate their rental search early with many continuing to successfully find new residences; which would in turn drive down both the number of active prospects, and the number of available properties. Within our rankings, Vancouver was notable for gaining 4 positions to achieve the top spot, along with Winnipeg and Edmonton which gained 6 and 4 positions respectively.

Secondary Markets (Populations ~235-600K)

Secondary Markets Drill Down (M/M): August 2024 vs. July 2024

Notable Changes in Secondary Market Demand Over The Past Month

*Secondary markets demand scores are down -10.1% month-over-month, unique prospects are down -14.1%, and property counts are down -1.9%.

Secondary markets saw the largest monthly drops in overall active prospects of all market segments, and about 1.5x the rate of decline of the top 40 markets. This segment also saw a marginal decline in active properties, which resulted in the decline of average prospects per property -12.4% month over month. Hamilton followed by Victoria were the two standaway markets which experienced less moderate declines in active prospects at -1.8%, and -7.0% monthly. With these two markets removed average prospects saw declines ranging from -15% to -26.5% in Halifax.

Secondary Market Drill Down (Y/Y): August 2024 vs. August 2023

Notable Changes in Secondary Market Demand Over the Past Year

*Overall, year-over-year demand scores are down -34.4% year-over-year, with prospects down by -52.1%, and properties are down by -1.5%.

Secondary markets have experienced the largest overall decline in annual prospect counts of all market segments. While this is reflective of the overall annual decline in rental demand it also compares the relative top of rental market demand in 2023 against a substantially depressed 2024. Moving forward as rental demand will continue to slow we expect ongoing annual comparisons to show less major declines. The markets which experienced the greatest decline in active prospects include Halifax -80.8%, Etobicoke -65.0%, and Kitchener -64.4% however while the total number of active prospects is down, those renters who remain active continue to submit more leads than in previous years.

Tertiary Markets (Populations ~100-235K)

Tertiary Markets Drill Down (M/M): August 2024 vs. July 2024

Notable Changes in Tertiary Market Demand Over The Past Month

*Demand scores in tertiary markets decreased by -5.7% month-over-month, unique prospects are down -6.3%, and available properties are up +2.0%.

Tertiary markets were the only market segment which saw an increase in the number of active properties however this was underscored by the decline in renter demand due to declining active prospects. Within the top 10 rankings, Sudbury gained 4 positions due in part to a +9.1% increase in active prospects, while Kingston dropped 3 positions due to an outsized decline in active prospects -29.5% likely related to the start of the Fall post-secondary semester.

Tertiary Markets Drill Down (Y/Y): August 2024 vs. August 2023

Notable Changes in Tertiary Demand Over the Past Year

*Overall, year-over-year demand scores are down by -11.3%, unique prospects are down by -37.8%, and available properties are down -5.3%.

Annual demand score comparisons have returned to the long-term trend of decline for tertiary markets during what would otherwise be the peak in annual rental demand. Tertiary markets are the only market segment which has seen prospect counts decline across the board, with all 10 markets in our rankings showing some level of declining prospect counts ranging from Guelph -19.8% to Kingston -51.3%. In the short term these communities are likely to continue showing signs of declining rental demand with the reduction of international student enrollment, and declining immigration targets however in the long term their greater perceived affordability will likely bring forward additional growth and rental demand.

Conclusion

August marked the beginning of the post-summer rental slowdown as we approach the Fall season, with the largest single-month drop in active prospects of 2024 at -10.6% nationally, and -9.8% across our top 40 markets in demand rankings. This decline, while part of expected seasonal trends was more pronounced than in previous years, and came earlier in the year. With pre-covid peak rental demand typically occurring in July/ August whereas post-covid that peak has shifted down squarely into July. This suggests that the long-term dynamics of the Canadian rental landscape are shifting as we enter a new period of Canadian rental demand.

Although the decline of rental demand is now typical for August, it underscores the broader shift seen throughout 2024 with consistently low rental demand. The brief uptick in July failed to carry momentum due in part to the timing of the Fall school semester, alongside the decline of international students, and more broadly Canadian immigration as a whole which has lessened rental demand for new entrants looking for their first home in Canada.

Additionally, while property counts declined in August by -1.8%, the substantially greater decline in active prospects suggests that more renters are opting to stay put; by ending their rental search early the result is further downward pressure on turnover rates which in turn keeps occupied units out of circulation for longer and has the result of applying more pressure on the supply of available units. Thus creating the potential for more price appreciation which in turn puts more pressure on in place tenants to remain in place. Creating, fueling, and sustaining a vicious cycle which sees reduced mobility, reduced availability, and further pressure on available units.

While there are fewer active prospects on market, those who remain active are submitting more leads than previously with average lead submissions per prospect up +3.4% annually. This factor in combination with limited movement in property counts suggests that while prospects are more active and motivated to find a property, they are also more likely to be more particular thus making it harder for properties to attract them and close new leases.

As we move into the fall and winter months, the Canadian rental landscape is likely to remain a renters market, where competition amongst properties intensifies. With fewer renters actively leasing, and those who are active are more selective than ever before it becomes increasingly difficult for properties to attract quality prospects and close new leases. Marketers and leasing professionals will need to be more strategic in ensuring their listings stand out in an increasingly competitive market to attract quality tenants in a market that shows no signs of abating.

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 Vancouver, BC received a demand score of 4.4 this month, versus 4.8 last month. Vancouver experienced a 0.4-point decrease 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 Vancouver, BC decreased by -8% in August 2024 versus July 2024. The year-over-year demand score in Vancouver increased by 1.2 points representing a 37% increase from August 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, Vancouver, BC achieved the top spot in our Top Canadian Cities in Demand rankings, up 3 spots from last month, and up 14 spots from last year's ranking.

*This report provides month-over-month rental listing data for August 2024 versus July 2024 and a year-over-year comparison from August 2024 versus August 2023. It also outlines the month-over-month and year-over-year trends in primary, secondary, and tertiary markets.

Rentsync National Rental Demand Report: September 2024