Where have all the tenants gone?
A recent post online asked this question. The landlord was surprised that they have a vacant property and are having trouble finding a tenant. When they rented it two years ago there were multiple applications at the first showing.
The economy is always changing and has adjusted causing a tenant favourable rental market. This means there is more product for rent than there are tenants looking for a place to rent. Over supply compared to current demand. Two years or even a year ago when your property was advertised many people were viewing it and applying almost immediately. Today tenants have time to view a property, and look at multiple other units before they choose to apply for one they like.
Why has this happened and when will it end?. There are many factors why this has occurred. The first is the high interest rates have slowed the sales market back to normal type of selling activity. With less product selling, more rental products are not leaving the rental market, and some owners are choosing to rent their property instead of selling. Combine this with developments which have recently completed and owner/investors who expected to sell their newly built condos are finding they are unable to obtain the sale price they expected. This is causing them to add their product to the rental market and seek tenants until the market returns to a price level they want to achieve. These two factors are adding significant amounts of rental products to the market.
We expect this pattern to continue for the next two to three years until development of the current product comes to completion and slows down the new product entering the market. A number of planned projects have elected to not move forward with development due to cost of building which will eventually slow the amount of product entering the rental market.
The lowering of the interest rates will spur some sales activity though we don’t expect to see covid like market conditions again anytime soon. This will not be enough to raise the sales prices to levels inventors feel comfortable with selling their property.
Another factor affecting the market is legislative changes to rental housing. The change for a new owner taking possession after purchasing a tenant property increasing the notice to vacate from two months to three months will restrict the sales of rental properties. The increase of owners occupying a unit from two to four months will also restrict when an owner can reoccupy their own property. This will lead to more properties sitting vacant when a tenant leaves making it easier for the owner to sell or occupy again.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
