Housing prices have declined since February 2022 but guess what? The price of renting a home or apartment has jumped similar to how the values of homes increased during the pandemic.

To help clarify why rents have risen it helps to look as an investor does when considering buying a property to offer as a rental. The average price of a home in Oshawa is currently around $880,000. Investors need a minimum down payment of 20% so once they plunk down $176,000, they are left with a mortgage of $704,000. At today’s rates that would carry for about $4,800 with taxes and home insurance. In essence, a landlord would need to rent the home out for close to $5,000 to cover their costs of ownership. In Whitby, the average of the 150 rentals available on MLS of all types of rental accommodation is just over $2,900. Financially this does not make sense, and this is one of the reasons that investors are sitting out and not buying homes.

Going back to the peak of the market in February, an investor would still need a rent of about $4,600 to cover the basic costs. Little has changed, however, an investor hoping to capture increased values in an up market is more prepared to take a risk than when costs go up and values are declining.

What does this have to do with tenants and rents? The costs to carry rental properties are directly passed back to the tenants in the form of rents and over the past year, those rental numbers have been increasing dramatically.

Here are some rental statistics to give some context:

Area                          Average Rent   year over year increase
Canada                     $2,043                    +15.2%
Oshawa (1 bdrm)      $1,665                      +12%
Oshawa (2 bdrm)     $2,038                     +8% 
Ontario                      $2,451                     +18%

As stated above an investor looking to cover their monthly costs by rental income has spiked with the prices being high, along with the mortgage rates rising. The other factor is that much of what is being built as purposeful rental stock is coming to market from more institutional property owners at very high rental rates. The high-rise buildings that are currently being built on Dundas St. in downtown Whitby is one such project and at Mary/Bond are in the $2,200 range for a small 2-bedroom unit.

If you are a tenant looking to rent a property, I would suggest getting a credit report done by Equifax and having it available when you apply for a place to rent. Also, if your credit is “bruised” do your best to clean it up by paying off any liabilities you may have along with reducing debt if possible. This will better your chances of securing a rental. Also, ask friends or family members along with previous or current landlords to be used as references when a landlord does their background checking. All these items help to ensure that when a rental is found, you can move quickly and help the landlord make you, their choice.

Landlords want a few simple things – a tenant who is clean, quiet and pays their rent on time. Tenants on the other hand want a clean place to live in peace and repairs done if the property needs work. It truly is a 2-way street, and when both sides are happy, rarely does one side hear from the other.

If you are looking for rental advice, I am happy to help. I can be reached at lindsay@buyselllove.ca
Connect with us on Facebook, Instagram and LinkedIn.