Rental prices are falling in Vancouver and Toronto. Such phenomenon unheard of in the cities of Vancouver and Toronto, the fastest growing cities in Canada. Vancouver suffered from the biggest drop. The advertised rent for two-bedroom apartment has fell by as much as 15% and COVID-19 is believed to be the main cause for it. The two cities are similar and suffers from same problem.
Accordingly, to the average rent demanded for two-bedroom apartment from rental.ca, it dropped by almost $450 to $2450 a month in the City of Vancouver. COVID-19 halts the economy, but it should not affect rental market as much given that BC Housing is providing rental subsidy. Overall, Toronto rent fell by approximately 5% and Vancouver 9%.
The data is telling us that landlord is having trouble finding tenants amid the pandemic. We believe the cause for reduction in demand from housing can be divided into domestic and international demands.
Vancouver and Toronto are being hit the hardest in the housing market compared to other provinces it is because the two cities are heavily influenced by international travelers including international student, tourism, and foreign workers. When the boarder closed, this eliminates the people from entering the country including immigration, international student, and temporary resident. This does not stop people from leaving the country in fear of the pandemic worsen in comparison to where they originate. As a result, we are continuously losing resident in the city.
Domestic demand comes down to what Vancouver has been struggling with for a long time: affordability. Living in Vancouver is expensive, job loses and household debt is putting extra pressure in amid this time and people is unlikely to move to new rental units due to social distancing and relying on eviction restriction helping those who cannot afford to pay rent.
Due to the above reasons, the rental market is in a stalemate. Most people rent in these cities with a vacancy rate of less than one percent is seeing a plunge in average rent. The two cities are heavily reliant on international affairs and it is shown in the rental market. These are only short-term effects, if the boarder continues to be closed and student allowed to continue their education remotely it will be a hit to not just the rental market.