The average rent for available apartment stock in Winnipeg decreased significantly, while median purchase prices for houses rose by a similar margin year-over-year, according to reports from Rentals.ca and Royal LePage.
In Winnipeg, the average monthly rent for an available one-bedroom unit dropped 7.4 per cent, to $1,082, in September, putting it tenth best in terms of affordability out of 35 large Canadian cities surveyed by Rentals.ca and Bullpen Research and Consulting. Meanwhile, Toronto saw the largest drop in year-over-year average rent last month, dropping 14.9 per cent to $1,967 — still the highest figure for all Canadian cities surveyed.
At the same time, the median price of a Winnipeg two-storey increased by 8.9 per cent year-over-year this quarter to $375,721, with bungalow sales up 2.2 per cent to $304,078. Nationally, the actual average home price in September reached $604,000, a record, up 17.5 per cent from last September.
The rise of home prices and fall of rents likely owes a great deal to the pandemic, which has added to already existing market conditions to create such a strong shift nationwide.
Decreasing rent was a phenomenon seen in much of Canada, but especially on the Prairies, where cities like Regina (-9.9 per cent), Saskatoon (-10) and Red Deer (-11.9) saw even larger drops than Winnipeg, said Paul Danison, the content director for Rentals.ca.
A number of factors contribute: for one, Danison said, movement has been largely restricted throughout the pandemic, which puts a bottleneck on the arrival of typical renters — students, new immigrants, and tourists who flood the short-term rental market. Some typical young renters have also chosen to move back in with their parents to save money.
"You put all these things together, and there’s a lot more supply than demand," said Danison, who pointed out that in January, Winnipeg’s vacancy rate was pegged at just over 3 per cent, a number that has no doubt been impacted by the pandemic as well as more major residential projects becoming available.
Another element that’s caused a shift is the added appeal of home ownership during the pandemic, which has spurred massive competition for properties both nationally and in Winnipeg. For the third month in a row, a significant portion (33 per cent) of homes sold in the city in September sold for higher than list price, according to Royal LePage, an indication of both a steep decline in inventory and a surging interest amongst potential buyers.
"As a result of social distancing measures and more people working from home, the true value of home has risen," Royal LePage Prime Real Estate’s managing partner Michael Froese said in a release. Consumer confidence in the city is high, and much like they have since the market began rebounding in April, buyers are taking advantage of low interest rates and pent-up demand, fuelling a seller’s market.
Even though many cities experienced a similar dearth of inventory, the Canadian Real Estate Association said this September there were 46 per cent more sales than September 2019. Nationally, Royal LePage is predicting the aggregate price of a Canadian home to increase 7 per cent during this upcoming quarter as compared to Q4 2019. The company forecasts Winnipeg’s will jump by 2.5 per cent over the same period.
While the average rent of available units in Winnipeg has dropped, per Rentals.ca, data from the Canada Mortgage and Housing Corporation’s 2020 report showed the average rent for all units in the city was $1,070, with one-bedroom units at $957. That means the available units are more expensive than that overall average, which adds challenges to those looking to rent, said Lissie Rappaport, End Homelessness Winnipeg’s manager of housing supply.
Rappaport said the decrease in rent is still a good thing to see, and it makes sense given that Winnipeg has some of the lowest median incomes in the country, but it’s too soon to make any clear conclusions about the results, especially so soon after the province lifted its ban on residential evictions on Sept. 30. Also coming into play of course is the temporary provincial ban on rent increases, which by definition kept landlords from raising monthly fees for tenants and curbed year-over-year increases.
Meanwhile, challenges to obtain housing persist: at least 9,000 families are on the province’s wait-list for subsidized housing, Rappaport said. According to the city’s housing needs assessment, one-person households have the lowest incomes and face the most significant affordability barriers, she said. Through EIA, those people receive $576 per month, and would need twice that to afford the average rent cost of an available one-bedroom unit.
Ben Waldman covers a little bit of everything for the Free Press.