Wednesday, April 13, 2022 / by Bryan Baylon
Looking at how the rental inventory has changed over the past year, we see that:
- single-family detached actives have increased by 99%
- apartment actives have increased by 69%
- townhouse actives have increased by 15%
It is clear that single-family rentals are in much greater supply in 2022 and now comprise 71% of rental listings. At the same point in 2021 they were only 51% of rental listings.
This goes some way to explaining part of the drop in average rents between 2021 and 2022. The average asking price for a single-family detached rental is currently $1.61 per sq. ft. per month. It was $1.97 this time last year having peaked at $2.09 at the end of March 2021.
For apartments, the current average asking price is $2.16 per sq. ft. per month' having been $2.04 this time last year.
For all types of condos (townhomes and apartments), the average asking price is currently $2.02 per sq. ft. per month. It was $1.90 this time last year.
So the drop in rental prices is NOT happening to townhomes, in fact they have been increasing. They also remain in short supply. Apartment rents have also increased but supply is much better than a year ago.
The big changes are in single-family rentals where supply has doubled over twelve months and the average rent asked has declined by 18%.
There has always been a price differential - single-family homes are cheaper to rent than attached homes, when allowing for the size of the living space. However the difference is greater now than we have seen for a very long time. The relative cheapness of single-family detached rents should make them more attractive to tenants as long as they need the extra space. This could compensate for the increased supply. However I would say it is obvious that the weakest part of the whole housing market is now single-family detached rentals and investors building out whole subdivisions of these properties, or buying them in large numbers, should bear in mind that the number of prospective tenants is by no means infinite. If you keep adding to your inventory without limit, you will eventually run short of tenants.
The ARMLS rental numbers are not based on the whole market, but they are a reasonably representative sample. They are flashing a warning signal for single-family rentals.
Market incites provided by the Cromford report.