Sure, it may be very expensive to buy a home in Canada, but don’t forget it’s also very expensive to rent one—and getting pricier every month, as average rents across the country have returned to their pre-pandemic high of nearly $2,000, according to new data from Rentals.ca.
Why it’s happening: The reversal of two pandemic-era trends—the flight from cities and rock-bottom interest rates—is driving the rent surge.
- Rental demand evaporated during the pandemic as the combo of work-anywhere jobs and cheap mortgages encouraged people to buy homes in greener pastures outside cities.
- Those days are mostly behind us (yay), but that’s quickly turned into more demand for rentals and surging prices (boo) as higher interest rates make it tougher for people to get a mortgage and people return to cities for work and school.
The bad news for renters doesn’t end there. It’s also getting more difficult and expensive to build new housing, which means less supply coming into the market.
- Some developments are already being cancelled because costs have increased so much, and higher interest rates will make it harder for builders to get financing for new projects.
Bottom line: Housing prices are coming down, but some of the pressures that drove them up in the first place (like a population growing faster than the housing stock) have just shifted into the rental market where they’re having much the same effect.