With demand rising and no new rental towers being built, rents will rise and renters will look to transit corridors, says expert
The demand for rental units in Vancouver is so high that “if it’s livable, it will rent – in about seven minutes,” according to Don Campbell, senior analyst at the Real Estate Investment Network. “That is a sign that rents will continue to increase.”
Speaking on Roundhouse Radio’s Real Estate Therapist latest edition (scroll to 42:30 for rental segment), Campbell said, “In regions that have tough rent controls, BC being one of them, from a [bottom-line] spreadsheet point of view, the ability for large developers to build rental towers is zero. It’s not making any sense. You’ve got interest rates going up, land costs going out of control, and you’ve got lots of NIMBYs saying ‘don’t build those rental towers around here.’
“So it’s not going to get any easier for renters.”
Campbell said that it was inevitable demand would ripple out of Vancouver to neighbouring municipalities, especially those along transit lines with easy access to Vancouver. “Along the light rail transit, SkyTrain corridors – and hopefully the funding for Surrey LRT will come for its corridor – that’s where the demand for rental housing will have to move. Because at least it will be a little less expensive out there, to rent and also to build rental-specific properties.”
He said, “It’s funny, and sad actually, that those independent landlords who own one, two or three extra properties that they’re renting out, because they don’t have a job that gives them the full government pension, they actually have to look after themselves and put their own money in the game – they get vilified by government policy. Look at the math… There are 100,000 people in Greater Toronto that have a second property. That means 100,000 rental properties on the market that weren’t built by a big REIT [real estate investment trust] or the government. You take even 20% of those out of the market, you know what the rents are going to do.
“Rent controls, optically, make sense, and they do control the market. But what they also do is ultimately lead to higher rents – which is bizarre… But you only have to look at Vancouver, where this is happening... Who’s going to build a rental building now when the demand for condo living is so high?”
Campbell added, “If you’re thinking about investing, make sure it’s at least cash-flowing or break-even, which might mean you’ll need to go further outside of downtown.
“But the record rents that we’re seeing, they’re not going anywhere. No government policy is going to change those. When there are hardly any tomatoes in the store, they jack the price up because lots of people want tomatoes – and that’s exactly what we’re seeing in the housing market.”
Listen to the Real Estate Therapist show each Saturday morning, 9-10am, on Roundhouse Radio 98.3FM and streaming on roundhouseradio.com– and email your housing questions to email@example.com