Demand Trends for the Canadian Market:

There is no questioning whether demand trends will rebound before the summer ends, with demand now down over the past 3 months, and showing no sign of rebounding. Demand is down and will remain as such for the foreseeable future or until tangible changes are made in the market to address the concerns of renters across the country.

In June active prospects were down -4.4% month-over-month across the country, while our top 40 Canadian markets fared only slightly worse at -5.1%. However, it remains a far cry from last year which saw prospect counts increase +1.9% across the top 40 markets in June 2023. With overall prospects down -33.9% year-over-year this summer leasing season is showing to be the slowest in recent history.

Many Canadians are staying out of the rental market, with many deciding to remain in place thus taking themselves out of the pool of prospective renters while keeping their current units out of circulation. This ultimately leads to lower rental demand and worsening affordability with many older and potentially more affordable units being kept off market for longer.

We’re seeing the outcomes from a lack of affordable housing play out in real-time, with depressed leasing activity, and changed dynamics. With fewer active renters, the long-term implications suggest a potential for further tightening of rental demand unless the concerns posed by renters are addressed.

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 down month-over-month across the top 40 markets -3.7%, with prospects down -5.1%, while properties have declined -1.4% from May. The top 10 markets show a more exaggerated trend with prospects down -8.0%, and properties down -6.5% from May, which shows an accelerating trend from the month-over-month changes of April to May 2024 which saw prospect counts decline by -5.6%. This accelerated decline in prospect counts in combination with the decline of active properties suggests that many renters are successfully ending their rental search upon finding a new rental, however, the disparity between the two figures suggests that many more are still choosing to terminate their rental search without finding a new unit to lease. This goes directly in the face of conventional seasonality which would see active prospect counts continuously drive upwards until July/ August before ramping down during the Fall.

Month-Over-Month (M/M)

Primary: Demand scores are down -5.6%
Secondary: Demand scores are down -8.1%
Tertiary: Demand scores are up +6.0%

Month-over-month (M/M) National demand scores were down -3.7% in June 2024 compared with May 2024. While the country saw prospect counts decline, tertiary markets saw an uptick in rental demand.

Notable Changes in Demand Over the Past Year

Annual demand score comparisons show an incorrect view with year-over-year demand scores up +3.2%, while actual prospect counts are down -33.9% and total leads are down -26.4% year-over-year. The annual growth of demand scores is not directly reflective of real-world conditions and instead due to the long-term shifts in average prospect counts which are used to normalize demand scores and due to their long-term trend of decline show more moderation than the direct indicators of rental demand.

Year-Over-Year (Y/Y)

Primary: Demand scores are up +1.9%
Secondary: Demand scores are down -11.2%
Tertiary: Demand scores are up +23.5%

Year-over-year (Y/Y): Within our top 40 markets demand scores are up +3.2% in June 2024 compared with June 2023. Real demand by renters has declined year over year with total leads down -26.4%. However, the renters who remain active in the market are submitting more leads with the average number of leads submitted up +8.3% 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): June 2024 vs. May 2024

Notable Changes in Primary Markets Over The Past Month

*Overall demand scores are down -5.6% month-over-month, unique prospects are down -6.7%, and properties are down -1.1%.

Primary markets saw limited activity with relatively few properties being removed. Only three markets showed upward movement in their rank positions (North York, Ottawa, Mississauga), while only a single showed positive growth in active prospects in Ottawa with prospects up 4.2% month-over-month. This summer has not been productive for larger and more expensive markets which continue to show the most outsized losses of relative rental demand.

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

Notable Changes in Primary Market Demand Over The Past Year

*Year-over-year demand scores are up +1.9%, prospects are down -36.9%, and properties are down -10.6%.

Annual market comparisons continue to show more aggressively declining prospect counts. The order of our top 10 primary markets saw a reshuffling most notably with Winnipeg which gained 5 positions to gain the #5 spot, Vancouver which gained 2 positions to take on the #1 spot, and lastly, Scarborough and Toronto which dropped 5 and 4 positions respectively to take on the #9, and #10 spots. With so many renters concerned about the high cost of living, and growing rents across the country, we see that those markets which remain more affordable see more favourable shifts in overall rental demand.

Secondary Markets (Populations ~235-600K)

Secondary Markets Drill Down (M/M): June 2024 vs. May 2024

Notable Changes in Secondary Market Demand Over The Past Month

*Secondary markets demand scores are down -8.1% month-over-month, unique prospects are down -5.5%, and property counts are up +2.8%.

Secondary markets saw a more moderate decline in prospect counts in June relative to the broader country however, the increase in active properties resulted in a decline in average prospects per property which pushed these markets further into the territory of a renters market with a decline of both relative demand and competition for available units. Oshawa took the #1 spot from Halifax which dropped 2 positions. Three markets went against the trends and saw growth in prospect counts; Kitchener +6.8%, London +8.4%, and Windsor +20.9% month-over-month.

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

Notable Changes in Secondary Market Demand Over the Past Year

*Overall, year-over-year demand scores are down -11.2% year-over-year, with prospects down by -35.3%, and properties up by +5.1%.

Secondary markets show a near-universal decline in annual prospect counts with Windsor being the one exception with prospect counts increasing year over year by +5.4% which is far from the average -35.9% decline of the remaining 8 markets in our rankings.

Tertiary Markets (Populations ~100-235K)

Tertiary Markets Drill Down (M/M): June 2024 vs. May 2024

Notable Changes in Tertiary Market Demand Over The Past Month

*Demand scores in tertiary markets increased by +6.0% month-over-month, unique prospects are up +0.7%, and available properties are down -5.0%.

Demand fundamentals in tertiary markets are diverging which has resulted in average prospects per property increasing by +6.0% in June leading to better market fundamentals and growing rental demand. Tertiary markets for the most part showed growth in active prospects with 7 communities showing growth averaging +10% month-over-month, while only 3 properties (Abbotsford, Regina, Sudbury) showed declining prospect counts averaging -11.7%. Although the overall average shows declining property counts, many markets showed little movement suggesting stable property counts.

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

Notable Changes in Tertiary Demand Over the Past Year

*Overall, year-over-year demand scores are up by +23.5%, unique prospects are down by -19.0%, and available properties are down -5.3%.

Tertiary markets continue to show the lowest relative decline in prospect counts compared to larger markets and the broader country. Smaller more affordable communities are experiencing more favourable conditions with renters less wary and more likely to search for new rental accommodations.

Conclusion

June further solidified the trends we've seen over the past 4 months of unseasonably low rental activity alongside continuously declining prospect counts. Active prospects are down by 5.1% amongst our top 40 markets which flies in contrast to 2023 which saw continued growth in active prospects into July.

A growing number of Canadians are staying out of the active rental market due to a lack of suitable options, price hesitancy, a lack of perceived security, etc. Remaining in place, effectively removing themselves from the pool of prospective renters and keeping their current units off the market. This leads to lower relative rental demand with fewer people on market, and exacerbates affordability concerns, as older and potentially more affordable units are kept off market for longer periods. The outcomes of a lack of diverse supply of housing are playing out in real-time as the summer months enter their peak; without the associated peak in rental demand.

This summer is likely to be the slowest in recent memory that is not directly related to a total shuttering of the Canadian economy and the physical limiting of movement, but instead due to the renter’s unwillingness to move.

The trend of declining rental demand didn't happen in a vacuum. Contributing factors include decreased affordability, a growing cost of living, and a lack of long-term rental construction, amongst many others. As a response, renters have become increasingly focused on securing more economical housing. Some have migrated to more affordable communities, some remain more price-conscious and choose more moderately priced units in favour of those with better features, and many more choose to stay in place; reducing the turnover rate and further contributing to declining rental demand.

The dynamics of this year's summer leasing season make it clear to property owners and managers that the tides have shifted and we are now well within a renters market. Leasing professionals should be careful to monitor the performance of their listings to ensure that they can stay current on current trends and are not left high and dry with no leads.

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 4.9 this month, versus 5.6 last month. Burnaby experienced a 0.7-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 Burnaby, BC decreased -14% in June 2024 versus May 2024. The year-over-year demand score in Burnaby increased by 0.1 points representing a 0.3% increase from June 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.

Rentsync National Rental Demand Report: July 2024