Demand Trends for the Canadian Market:

Following January’s explosive growth, February showed more typical seasonality with little to no movement in prospect counts, property availability, or overall market sentiment. Overall prospect counts are almost unchanged up only 0.1% monthly, while available properties shrunk -0.9% showing a return to the pre-holiday seasonal slowdown, with prospect counts flat, and available properties slowly shrinking as more are taken out of circulation.

Renters did not show any significant shifts in demand in February with overall leads per prospect only up 0.4% suggesting that while some may be ramping up their rental searches, a majority of renters have not increased their online rental search activity.

Primary markets saw the biggest monthly gains in overall demand metrics with prospects up 0.6%, while active properties declined -2.1% resulting in tightening market conditions and a +2.8% increase in average prospects per property.

Annually, the biggest changes we've identified are in the number of markets which meet our minimum property requirements to be included within our reporting. The long-term tightening of market conditions has created a vicious cycle of renters choosing to remain in place for fear of having to pay higher market rents, with more people choosing to remain in place fewer units turnover, reduced turnover thus limiting the supply of available units on market and tightening supply; This chain leads to fewer available units with each passing month which in turn results in continued rent growth as the market continues further into imbalance between demand and supply.

As summer approaches we will see a rebounding of supply, while major markets will similarly experience the unlocking of new units which will help relieve tensions in the market, however it remains too early to say whether this will have a meaningful impact on long term market conditions.

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 relatively flat month over month across the country now that we have gotten past the January bump in activity after the holiday lows. Across our top 40 markets prospects are up +0.1%, prospects are down -0.9%. The top 10 markets fared slightly better with prospects up +1.1%, and properties up +2.2% monthly showing their resilience. This more moderate monthly change relative to January was expected and is reflective of typical market conditions leading up to spring.

Month-Over-Month (M/M)

Primary: Demand scores are up +2.8%
Secondary: Demand scores are down -1.7%
Tertiary: Demand scores are down -5.6%

Month-over-month (M/M) National demand scores up +1.0% in February 2024 compared with January 2024. February saw muted changes in Canada’s rental landscape and a return to the pre-holiday trend of declining property counts.

Notable Changes in Demand Over the Past Year

Annual demand comparisons are not directly reflective of current market conditions with the changes in demand score divisors effectively putting this year and last year on different scales. While unique prospects are down -15.9% and available properties were down -10.7%, resulting in average prospects per property declining by -5.8%. These indicators show that market conditions have deteriorated year-over-year which is not reflected in overall demand score calculations.

Year-Over-Year (Y/Y)

Primary: Demand scores are up +40.6%
Secondary: Demand scores are down +15.9%
Tertiary: Demand scores are up +29.8%

Year-over-year (Y/Y): National demand scores are up +35.9% in February 2024 compared with February 2023. Comparisons of annual demand scores are not directly reflective of current market conditions, or year-over-year trends.

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): February 2024 vs. January 2024

Notable Changes in Primary Markets Over The Past Month

*Overall demand scores are up +2.8% month-over-month, unique prospects are up +0.6%, and properties are down -2.1%.

Primary markets saw demand growth through the combination of growing prospect counts; albeit minor, along with a decline in available properties which resulted in average prospects per property increasing by +2.8% monthly. This more muted growth relative to the explosive increase in both properties and prospects in January is reflective of typical seasonal trends. While January sees a bounce back from the holiday slowdown, February sees more muted monthly changes relative to what was experienced running up to the seasonal decline with minimal renter activity.

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

Notable Changes in Primary Market Demand Over The Past Year

*Year-over-year demand scores are up +40.6%, prospects are down -16.2%, and properties are down -14%.

Annual market comparisons exemplify the tightening market conditions seen across the country as renters exit the market, and properties slowly dry up. With many units which would have otherwise been available and on market remaining occupied, available properties are down resulting in a greater imbalance of supply and demand. Overall demand scores do not adequately reflect this trend and as such are not directly indicative of the long-term trends being experienced. Moving forward we expect annual prospect counts to continue trending downwards simply as a result of fewer and fewer people remaining on market with the progress of time.

Secondary Markets (Populations ~235-600K)

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

Notable Changes in Secondary Market Demand Over The Past Month

*Secondary markets demand scores are up +1.7% month-over-month, unique prospects are down +4.2%, and property counts are down -2.6%.

While secondary markets as a whole saw an overall decline in rental demand, there were a few notable exceptions specifically Hamilton, London, and Windsor all of which saw substantial growth in demand scores due to the movement of prospect and property counts in opposite directions. Halifax and Windsor were notable for the fact that they experienced the most pronounced declines with prospect counts down over -21% for both markets. Secondary markets maintain the highest average prospects per property count of all market segments at approximately 18.9 prospects per property in February.

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

Notable Changes in Secondary Market Demand Over the Past Year

*Overall, year-over-year demand scores are up 15.9% year-over-year, with prospects down by -24.5%, and properties down by -6.0%.

Annual comparisons in secondary markets show the most dramatic decline of prospects of all market segments, suggesting that there are approximately a quarter fewer active renters on market in 2024 relative to 2023. Etobicoke leads the pack with the highest annual prospect decline at -41%. Followed by Halifax, Victoria, and Surrey all of which lost approximately a quarter of their prospects year over year.

Tertiary Markets (Populations ~100-235K)

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

Notable Changes in Tertiary Market Demand Over The Past Month

*Demand scores in tertiary markets decreased by -5.6% month-over-month, unique prospects are down -4.6%, and available properties are up +1.1%.

Tertiary markets were the only market segment which saw property counts increase albeit marginally month over month. This unfortunately did little to resolve supply constraints with the imbalance in supply and demand only expanding with average prospects per property down -5.6% monthly over month.

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

Notable Changes in Tertiary Demand Over the Past Year

*Overall, year-over-year demand scores are up by +29.8%, unique prospects are down by -15.2%, and available properties are down -5.7%.

As previously mentioned the increase in overall demand scores is not directly attributable to improved market conditions year over year, instead, they are a result of changing demand score divisors which in turn mask the shift in overall market conditions and lessen the blow from reduced renter activity. Market conditions are significantly tighter in 2024 relative to what was experienced in the early months of 2023, with fewer active renters, fewer properties, and a lower relative proportion of prospects to properties.

Conclusion

The explosive resurgence of the new year has been replaced with more muted shifts. Following the surge which returned prospect and property counts to roughly the same levels experienced in October 2023, February sees relative stability with the country as a whole showing limited movement of both active prospects and properties on market. Not evenly distributed throughout the country, the largest and most popular rental markets in Canada saw greater growth in prospects up +1.1% amongst our top 10 markets, and +0.6% for primary markets. Even this growth was uneven with most of this growth experienced in Winnipeg, Edmonton, Ottawa, and Calgary; while the largest and most affluent rental markets Toronto and Vancouver both saw declining prospect counts.

Its become clear that market rent acceptance is at an all-time low, and will only continue to worsen. With more and more renters simply choosing to remain in place we are now seeing what happens when far too many renters have essentially been priced out of their home markets and can no longer afford to move. Whether it be price acceptance, or unaffordability renters in the most expensive and affluent markets are moving less which is resulting in even tighter market conditions. With reduced turnover, whatever units remain on market will only be in greater demand.

This is not to say that everything is dire. With many residential projects nearing completion we expect to see an influx of new units over the course of the next 3 quarters which will alleviate availability concerns. However, even these new units will only represent a drop in the bucket of what's needed in the long term. The trajectory of rental demand over the course of the coming months will be important to track as further tightening will only drive more renters away from moving, with those remaining on market having to carefully consider their options. With reduced turnover and tightened affordability, it is more important than ever before to ensure you get the highest quality prospects for your properties to weather the storms ahead.

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 4.9 this month, versus 5.2 last month. Etobicoke experienced a 0.3 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 Etobicoke, ON decreased -7% in February 2024 versus January 2024, while maintaining its position within our rankings. The year-over-year demand score in Etobicoke decreased by 0.9 points representing a 16% decrease from February 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 maintained its position within our rankings from last year.

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

Rentsync National Rental Demand Report: March 2024