Rental housing markets across Canada are seeing weaker demand this fall as some postsecondary students pivot to online learning and stay in their hometowns, resulting in a spate of empty bedrooms and mounting losses for landlords.
Although policies differ by college or university, most have adopted a hybrid approach for the fall semester that allows a combination of online and in-person classes, with restrictions in place to reduce the spread of COVID-19. In many cases, however, students have the option of attending classes entirely online – and that has kept many from renting.
Demand from students “has completely dried up,” says Sara Hamilton, a real estate broker who frequently leases condos. Before the pandemic, most of her leasing activity in downtown Toronto came from students. “Now, there’s no interest from students at all.”
The student slowdown is contributing to broader weakness in the rental market, which has seen demand tumble during the pandemic. As a result, many units are sitting empty for longer and often get rented for less. For tenants in Canada’s priciest housing markets, the situation is a reprieve from years of low vacancies and surging rental rates.
Given the tenuous nature of university policies in a pandemic, it’s unclear when student rental demand will fully rebound.
“It’s going to take students actually being back in class to make it worth it for them to be back in apartments as well,” Ms. Hamilton says. “When they can be doing all of their classes from home, there’s no reason they can’t live with their parents, even in another time zone.”
NV Property Management Inc. could see where things were heading months ago. After the pandemic hit, seven students at Mohawk College in Hamilton broke their leases in April and moved home, says Lena Guirguis, NV’s vice-president of operations. When it came time to rent the two properties again, the student demand wasn’t there. The company is now renting them to low-income seniors.
“Longer-term stable tenants pay slightly more than the students would, and they maintain the properties way better,” says Ms. Guirguis. “It worked out great for us.”
The situation is less encouraging for Raymond Goulet. In a normal year, his rooming house in Sudbury would be full, with most of the tenants being students at nearby Collège Boréal. Now, five of nine rooms are sitting empty, which amounts to thousands less in income than he expected.
“I’m keeping my fingers crossed” on renting out all rooms, he says. “Because if I’m not, I’m losing upwards of $600 a room [monthly]. That’s going to get very costly for me as a landlord.”
Rental demand is being hit on several fronts, including pandemic policies that are slowing immigration into Canada, including by international students. In the Greater Toronto Area, international students and other non-permanent residents are “very tied to what’s going on in the condo market” and play a huge role in rentals, says John Pasalis, president of brokerage Realosophy Realty.
The number of newly listed condos for lease in the GTA reached a record high in August as supply outpaced demand, according to data from consulting firm Urbanation. The average condo rent declined 9.6 per cent from a year ago, to $2,272 a month. Data from multiple listing platforms show rents declining in Vancouver, too.
The shift is apparent to brokers. Ms. Guirguis says NV tried to lease a new studio in downtown Toronto that before the pandemic would go for $2,100 a month. Given the condo is furnished and close to Ryerson University, it would normally appeal to students. Instead, it took six months to fill – and for $300 cheaper.
“On a regular day, at an $1,800 price point, I would have had a lineup,” Ms. Guirguis says.
For student rentals, it’s not an across-the-board slowdown, however. Several landlords told The Globe they’re running at full occupancy in student housing. Some students want to get separation from their parents or don’t want to be stuck finding a place in January if protocols change for in-class learning. Others need access to campus facilities to complete coursework.
But for many, the option of saving money is too appealing to pass up. Ms. Hamilton, the broker, has a son who attends the University of Waterloo and will be completing his studies from home.
“There is no reason to pay $1,800 a month for a two-bedroom condo that he lost his roommate for in February,” she says.
For landlords like Mr. Goulet, it might be time to switch away from students. He says he’d consider shifting his focus to low-income seniors. “But ideally, I want the students.”
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