Availability hits record low and prices are up in Windsor rental market: report

Record low vacancy rates drive up rental prices A dramatic shift in the real estate market is making it difficult to find an affordable place to rent. Rich Garton explains.

A new report shows the rental unit vacancy rate in Windsor has hit a record low and the prices have increased.

The vacancy rate in the city is at 1.8 per cent, according to a report released by the Canada Mortgage and Housing Corporation (CMHC).

“Economic recovery and growth boosted demand against supply that was constrained by labour shortages,” said the report.

The CMHC said rent for vacant units were 20 per cent higher than those for occupied units, highlighting an affordability barrier for prospective tenants.

“Affordability remains a challenge for lower-income households that face very stiff competition for units they can afford. This is because those units are also accessible to higher-income households,” said the CMHC.

There were declines in vacancies for all unit types (number of bedrooms). The overall rate in 2022 is the latest result in a declining trend from a peak of 14.5 per cent in 2008. The report suggested that declining vacancy rates over a sustained period reflect the increasingly tight rental market.

Lizzy Ward and her partner were living in a two-bedroom home for $1,350 a month, but when their family grew a year ago, they know they had to look for something with more space.

The family found a three-bedroom home with a studio basement for $2,400 a month, plus utilities.

“We're worried almost every month,” she said. “Oh will this be the month that we can't pay rent? Will this be the month that we can't pay this bill or that bill?”

Ward is like many, who are now spending more than 50 per cent of their monthly income on housing alone.

“The amount of stress and worry and things that therapy can't even help because it's not something that's just you can talk about it and feel better,” she explained.

Real estate agent Rhys Trenhaile says the low supply and high demand means landlord can raise rents, which jumped 11 per cent in 2022.

“When the vacancy rate is that low, what you're doing is you're putting upward pressure on rents because now you start getting renters competing, instead of before we had buyers competing,” he said.

Bidding wars

In 2022, the CMHC said Windsor started seeing “bidding wars” on rental apartments for the first time. The report said this was highlighted in conversations with stakeholders on emerging themes.

“The low vacancy rate is the result of increasing rental unit demand coming up against limited rental unit supply. Fewer units are available to potential renters when more units are taken up than are made available,” according to the report.

Increasing demand

The CMHC said demand for rental units grew migration increased rental unit demand. Windsor’s population grew by 1.2 per cent in October 2022 year-over-year. The easing of pandemic restrictions at the start of the year brought back international migrants and temporary residents. At the University of Windsor, the return to campus brought students back to the area. Higher rental unit demand was supported by economic recovery and employment growth in sectors where the workers tend to be renters.

Home ownership costs impact rental market

Higher homeownership costs kept more people in the rental market supply was also constrained by higher costs of homeownership, suggested the report.

“Higher interest rates increased borrowing costs, and this led to a reduction in the capacity of some households to enter the market,” said the CMHC.

The impact of this was evident in the October 2022 MLS sales, which were 37 per cent below their five-year average. Some renters who would have transitioned to homeownership remained in the rental market. This was all reflected in lower rental-unit turnovers.

In 2021, almost 17 per cent of units turned over, while in 2022, only 13 per cent of units did. There were lower turnovers recorded for all unit types across all zones of the CMA, revealing the widespread nature of the decline.

- With files from CTV News Windsor's Rich Garton