Ottawa Vacancies Reach Historic Low
Rental Market Heats up
Most people who own homes have rented at some point in their lives, often due to circumstances beyond their control. As the rental market heats up, many are left wondering what is driving the trend.
There are several factors that contribute to the increasing demand for rental properties. Housing affordability has been a persistent issue for some in Ottawa, as well as across Canada, affecting citizens from all walks of life. The housing market is influenced by a variety of factors, including interest rates, inflation, and demographics, which all play a role in shaping supply and demand beyond the cost of goods.
The rise in housing costs, combined with a fluctuation in economical elements and declining affordability, has left many people unable to purchase a home of their own. This has resulted in an increase in the number of renters, driving up demand for rental properties and making it increasingly difficult for renters to find affordable housing.
Ottawa’s Vacancies Reach Historic Low
Ottawa's housing market has seen a significant decrease in the number of vacant apartments, reaching historic lows not seen since 2001. According to the latest Rental Market Report from Canada Mortgage and Housing Corporation (CMHC)
Despite an increased number of available units, the high demand for rental properties has made it challenging for prospective renters to find a suitable place to live. The vacancy rate in Ottawa fell from 3.1% to 1.9% in 2022 due to a number of factors, including an influx of newcomers to the city and the growing popularity of renting as a housing option.
This high demand has caused a decrease in the number of empty units in the city center, contributing to the overall low vacancy rate in the area. The limited availability of rental properties in Ottawa is causing competition among renters and potentially pushing rental prices up, making it increasingly difficult for people to find affordable housing in the city.
Ottawa Rentals Currently Available
Total Rentals Available: 711
Rental Row-Units: 255 (36%)
Detached Rental Homes: 228 (32%)
Rental Apartments: 193 (27%)
Terrace Rental Homes: 35 (0.5%)
Terrace Homes: $2096
Did you know ....The average rent for a 2-bedroom apartment went up by 5.6%, which is the highest it's been in a long time.
In Ottawa, people wanted to rent more because the area was doing well due to strong demographics and economic conditions.
This made it harder to find a place to rent, and the number of empty rentals went down from 3.4% in 2021 to 2.1% in 2022.
This was especially true in the city center, partly because college and university students came back to the area.
More people are moving to Canada and it's expensive to buy a home, so renting is becoming more popular.
What does this mean for those seeking homeownership?
Rent contributes to the competitiveness of homeownership. Canada’s actual increase in housing demand is far higher than official estimates.
CIBC Article - Notable Statements
“Tal, argues that it's not the number of new immigrants that should be used to calculate housing demand, but the number of new people coming into the country from abroad. And these numbers, he says, have been vastly underestimated.”(B.Tal,2023)
“Canada’s approach to housing supply needs to be rethought and done differently," CMHC deputy chief economist Aled ab Iorwerth said in the report. "There must be a drastic transformation of the housing sector, including government policies and processes, and an ‘all-hands-on-deck’ approach to increasing the supply of housing to meet demand.”(B.Tal,2023)
"It's not a stretch to suggest that the number of new international arrivals in 2023 might reach one million,"(B.Tal,2023)
- CIBC Deputy Chief Economist, Benjamin Tal
First Time Homebuyer / First Time Investors
Can You Relate?
Lack of Experience
Many first-time homebuyers have limited experience with the home buying process, making it difficult to navigate the complexities of the market and make informed decisions.
High Down Payment Requirements: First-time homebuyers often have to save for a substantial down payment, which can be difficult for those on a tight budget.
Competition in the Market
First-time homebuyers may face competition from other buyers in a hot real estate market, making it difficult to secure their desired property.
Limited Credit History
Many first-time homebuyers have limited credit history, which can make it more difficult to secure a mortgage with favorable terms.
Unfamiliarity with Home Maintenance
First-time homebuyers may be unfamiliar with the responsibilities that come with maintaining a property, including regular repairs and upgrades, which can be overwhelming.
Buying a home is a significant financial investment, and first-time homebuyers may feel uncertain about making such a large commitment, especially if they have limited experience with the real estate market.
3 Major Benefits of Home Ownership
Homeowners can build equity over time as they pay down their mortgage and the value of the property increases, whereas renters do not have this advantage.
Personalization + Control
Homeowners have the freedom to make changes and improvements to their property as they see fit, giving them a greater sense of ownership and control, whereas renters are limited in their ability to alter the property.
Stable Housing Costs
Unlike renters, homeowners have more stability in their monthly housing costs as the terms of their mortgage do not change, providing predictability and budget certainty over the long term, while rental prices can fluctuate.