No doubt you’ve read reports and news articles over the past few months that highlight the shifting attitudes of both renters and homeowners, with many setting their sights on the suburbs and rural communities.
The challenges of the pandemic, like social distancing, business shutdowns and remote working, have acted as a catalyst for many people to re-examine their lifestyles. The appeal of the densely populated, always-bustling urban city life has lost some of its lustre. In stark comparison, the suburbs offer the luxury of more space and more breathing room. The fallout? A revival in suburban and rural living, with both renters and buyers flocking to greener pastures.
Satellite Communities Benefiting
In the US, the start of 2020 saw many the real estate markets gaining steam. Going into the year, the rental market in New York City remained very strong. Yet, by December 2020, the median rent in Manhattan had plummet to a level not seen since 2010. The New York Times reports that, “the surge in vacancies has inspired a number of rarely seen concessions, including multiple months of free rent, waived broker fees and complimentary services at the owner’s expense.” Although, make no mistake, even though there were massive declines in rental prices throughout 2020, New York City remained one of the nation’s most expensive markets.
Nearby commutes like Brooklyn, Queens, Woodbury and Long Island benefited as tenants looked for more outdoor space and roomier apartments at a cheaper price. With more work-from-home flexibility, this urban exodus is even spilling over into a booming market in New Jersey for both home sales and new purpose-built rentals.
The Trend in Canada
These patterns are being mirrored in Canada. On the west coast, there has been a pick-up of purpose built rentals in satellite communities surrounding Vancouver, like Squamish.
In Toronto’s rental market, which is notorious for its high rents, low inventory and slow turnover, has seen the average price for condo rentals and apartments declining by 19.4 per cent in December.
Renters who were previously attracted to Toronto and the Greater Toronto Area (GTA) for the close commute or urban lifestyle found the possibility of working from home through lockdown unpleasant. Many realized that their dollars would stretch further out of town, and reap the rewards of more space, less overhead, and less density. (BNNBloomburg has reported that Toronto’s vacancy rate hit a 50-year high in December 2020.)
Communities on the outskirts of the GTA have seen remarkable gains. The suburban housing real estate market is super competitive, with prices up 20% in regions like Halton and Durham. Rentals.ca reports that some cities, like Gatineau, Kitchener and Hamilton, saw rental rates increase between 15% and 22% in 2020.
Looking Ahead
Most analysts agree, as vaccines start to roll out, lockdowns are lifted and students return to classes, urban centres will start to woo back renters. REMI predicts rental price increases for Canada’s major cities of Toronto, Montreal and Vancouver. Whether located in a smaller town, the suburbs or in the heart of the city, savvy property managers and owners are continuing to streamline their operations and increase their efficiencies to be able to future-proof their businesses.
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