Demand Trends for the Canadian Market:

The new year started with a bang as unmet demand surged resulting in a 24% increase in unique prospects and a 32% increase in total leads amongst our top 40 markets. Not only did the absolute number of renters increase, but on average prospects submitted 4% more leads than they did the month before. This jump in January activity represents typical annual leasing patterns with the final months of the year gradually declining; many renters choose to remain in place, while property owners reduce relisting activity during the holiday season. Once the holidays are over and prospects return to their daily lives so too do they return to their belayed housing searches which results in a surge of activity in a short time.

Primary markets saw the greatest gains in January +26.5% unique prospects with tertiary markets coming in as a close second at +24.1%. On the national scale looking at all markets regardless of the size of supply, we see that total prospects increased by +27% suggesting that there are many more tertiary markets which do not meet our tracking criteria but experienced substantial growth in January.

This surge in the first month of the new year is expected and reflective of typical seasonal trends. Unfortunately for many property owners who have had to contend with depressed leasing activity, this surge is only temporary and by the end of the month mostly over. Subsequent months will likely see more muted activity as we draw closer to Spring where rental demand will pick up and gradually accelerate as summer arrives.

It's still too early to predict whether 2024 will experience comparable rates of rental demand. Considering the annual rent growth and the ongoing trend of decreasing prospect counts, it's likely that leasing activity may continue to experience a downturn compared to the previous year. This isn't to suggest that leasing will come to a halt entirely. However, with prices reaching historic highs and more households opting to stay put, we anticipate a decline in turnover. Consequently, this decline will reduce both the availability rate and the number of active prospects nationwide.

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 trended upwards across the country as demand rebounded from holiday lows. Across our top 40 markets; prospects are up +24.7%, and active properties increased +2.5%. The top 10 markets fared slightly below the average with unique prospects up 23.8%, and properties up +3.4% resulting in the highest demand scores of any market segment nationally. This resurgence was expected and is in line with past years wherein prospects bounced up +24.6% in January of 2023 after the seasonal holiday decline. Most notably this month we see that primary markets saw the greatest relative growth in demand with many seeing quite substantial growth in overall rental demand, mostly notably Vancouver which saw its overall rank increase by 8 positions taking a spot in our top 10 markets.

Month-Over-Month (M/M)

Primary: Demand scores are up +22.5%
Secondary: Demand scores are up +16.5%
Tertiary: Demand scores are up +27.1%

Month-over-month (M/M) National demand scores up +21.7% in January 2024 compared with December 2023. January saw a surge in rental demand as Canadians returned to their daily lives after the end of the holiday season.

Notable Changes in Demand Over the Past Year

Annual comparisons show that relative demand is up thanks in part to fewer properties on market propping up the average number of prospects per property however, a deeper look sees a decline in unique prospects, alongside a moderate increase in available properties.

Year-Over-Year (Y/Y)

Primary: Demand scores are up +29.2%
Secondary: Demand scores are down -2.9%
Tertiary: Demand scores are up +24.2%

Year-over-year (Y/Y): National demand scores are up +24.9% in January 2024 compared with January 2023. Annual demand score comparisons are not directly correlated as the divisor used to calculate overall demand scores has changed. This results in higher demand scores for 2024 while direct indicators of renter activity such as active prospects -21.8%, and average prospects per property -13.5% are both down annually.

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): January 2024 vs. December 2023

Notable Changes in Primary Markets Over The Past Month

*Overall demand scores are up +22.5% month-over-month, unique prospects are up +26.5%, and properties are up +3.3%.

Primary markets saw the largest overall gains in January, maintaining higher average growth in prospects than the top 40 markets nationally. This rebounding is due almost exclusively to seasonality and aligns with the previous year's demand trends. Primary markets likely saw the highest rebound in January due to larger overall populations. The ranking of primary markets saw a lot of variability with Vancouver taking over the top spot up 4 from the previous month, while Montreal and Ottawa both gained three positions in our rankings, with the remainder of markets simply being reshuffled but otherwise maintaining their relative order. While overall primary markets saw strong demand growth, North York +3.9%, Scarborough +1.2%, and Mississauga +6.6% all saw significantly below-average growth in prospect counts; and except for Regina, these three markets saw the lowest monthly changes in prospects.

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

Notable Changes in Primary Market Demand Over The Past Year

*Year-over-year demand scores are up +29.2%, prospects are down -21.6%, and properties are down -12.5%.

Annual market comparisons show a significant decline in the number of active prospective renters on market. This is not to say that Overall rental demand has stagnated, but that renter activity is simply down year over year. This trend has been consistent throughout much of 2023 and will either stall in the first 2 quarters of the year suggesting that renter demand has stabilized, or will continue to decline as more prospects leave the market choosing to end their rental search early. Although we are likely to see demand continue to decline, we do not expect overall prospect counts to continue trending downward.

Secondary Markets (Populations ~235-600K)

Secondary Markets Drill Down (M/M): January 2024 vs. December 2023

Notable Changes in Secondary Market Demand Over The Past Month

*Secondary markets demand scores are up +16.5% month-over-month, unique prospects are up +20.7%, and property counts are up +3.6%.

Secondary markets saw available properties increase for the second month in a row with only three exceptions being Etobicoke, Victoria, and Windsor all of which saw monthly declines in available properties. While tertiary markets saw strong average growth, Halifax showed exceptional resilience with +46% in monthly prospects, with Victoria coming in as a close second at +32%. With the remaining markets showing an average of approximately 17%. Secondary markets maintain the highest average prospects per property of all market segments at 19 prospects per property up from 16.5 last month.

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

Notable Changes in Secondary Market Demand Over the Past Year

*Overall, year-over-year demand scores are down -2.9% year-over-year, with prospects down by -31.3%, and properties up by +2.1%.

Annual comparisons for secondary markets demand scores resemble what is being experienced with overall demand down annually. All the markets within our secondary market rankings have experienced declining prospect counts ranging from -14% in Victoria, to -43% in Surrey. Available properties although up on average vary more significantly between markets with Halifax and Victoria showing declines, Etobicoke, Hamilton, and Kitchener showing no movement, while Surrey, London, and Windsor all saw growth in available properties. Although demand scores show a minor decline in rental demand the actual experiences of these markets vary considerably.

Tertiary Markets (Populations ~100-235K)

Tertiary Markets Drill Down (M/M): January 2024 vs. December 2023

Notable Changes in Tertiary Market Demand Over The Past Month

*Demand scores in tertiary markets increased by +27.1% month-over-month, unique prospects are up +24.1%, and available properties are down -2.4%.

Tertiary markets saw the second-highest monthly growth in unique prospects second only to primary markets. Tertiary markets were the only segment which saw properties decline overall with Kingston -15.8%, and St. Catherines -8.1% showing the greatest decline. Regardless of availability, renters in these communities have returned en-mass with Guelph showing the highest increases at +75%, and Kingston at +64%. While January’s trajectory shows strong growth this rebounding only returns prospect levels to those experienced in October at best with many markets still significantly down. Monthly demand will continue to show signs of slowing for the foreseeable future as we gradually approach spring.

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

Notable Changes in Tertiary Demand Over the Past Year

*Overall, year-over-year demand scores are up by +24.2%, unique prospects are down by -21.3%, and available properties are down -8.5%.

Given the clear decline in both prospect counts and available properties alongside a -14% decline in average prospects per property, it’s clear that annual demand score comparisons do not accurately reflect the changes in market conditions over the past year. Market conditions entering 2024 are significantly tighter than those in the early months of 2023. With fewer properties available for lease, and rents which see no sign of slowing down many renters are choosing to respond to these conditions by simply remaining in place. Active prospects are down almost a quarter from last year and while we expect prospect counts to increase as the seasons progress, they are unlikely to return to similar levels as those experienced in 2023, or 2022.

Conclusion

Stepping into the new year, January promises and delivers new beginnings, with a surge in activity unique prospects increased by nearly a quarter month-over-month. This surge was a welcome relief to many who over the past 3 months experienced declining lead volumes and lessened demand. January offered if nothing, a short reprieve with more prospects on market, along with more activity per prospect; with prospects submitting on average 4% more leads. Effectively returning us to lead volumes and renter activity on par with what was experienced towards the end of October.

Primary markets led the charge with a +26.5% shift in active prospects, followed closely by tertiary markets at +21.4%. This surge in rental activity while invigorating and appreciated by all is only temporary. Subsequent months if following conventional trends will witness more muted activity with some markets seeing ongoing declines until spring arrives.

The overall trajectory of 2024 remains uncertain as strong annual rent growth coupled with a persistent decline of prospect counts down almost a quarter year over year, suggests that this year may experience even more subdued rental demand compared to the previous 2 years. Price exhaustion and a growing number of households choosing to stay put are anticipated to contribute to reduced turnover, impacting both the rate of availability and the number of active prospects nationwide.

While too early to tell what the overall trajectory of this year's rental industry is, we anticipate that properties in the lease-up phase will be affected. This is because price-exhausted communities are opting to stay in place longer, which will further reduce turnover and, as such, lead to less uptake of new units. With housing matters taking centre stage across the country we expect this year to be one full of new policy initiatives and practices to be implemented to spur new supply and as a result, promote affordability. Amid this tightened environment, property owners and managers should take great care in securing qualified leads who convert into quality tenants to ensure that their properties are well-positioned to deal with the tides to come.

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 Etobicoke, ON received a demand score of 5.2 this month, versus 4.6 last month. Etobicoke experienced a 0.6 point 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 Etobicoke, ON increased +15% in January 2024 versus December 2023, while maintaining its position within our rankings. The year-over-year demand score in Etobicoke decreased by 0.3 points representing a -5% decrease from January 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, Etobicoke, ON achieved the top spot on our Top Canadian Cities in Demand rankings and is up 1 position from last year.

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

Rentsync National Rental Demand Report: February 2024