The housing affordability crisis isn't a new one for Strathmore and the country, but it's a problem that continues to linger and could be getting worse. While most think of buying a house when speaking about the housing issue, rent has also greatly increased in price.
Per the Alberta Government's most recent data, the average rent of a 1 bedroom unit was $813, 2 bedroom $1021 and 3 bedroom unit was $1141 in 2021. With the exception of shared housing, no units in 2023 are below $1000, with most 3 bedroom units sitting at around $1775, according to Rentfaster's recent listings.
This jump in prices is a big leap from even mid to late 2022, when you could find 1 bedroom listings at around $1000. This sudden increase in prices isn't just a coincidence though, as Remax Key real estate agent Hayley Poirier said "the perfect storm" of events led to this big jump.
One of the big aspects of this storm is the supply and demand issue that most are aware of. A lack of available rental units creates more demand, thus increasing the price. However, the recent jump could specifically be attributed to landlords and condo owners selling their property while the market was hot.
"You have landlords who see that people are paying more for their condos and townhouses than that landlord had expected, so they then give notice and sell the condo that somebody might have been renting from them. Somebody buys that as a rental property and when they buy it, they again go into the market with a higher rental price for that same condo because the market's demanding it," she said.
This is a big factor in rising rent prices, but not the only one. On top of landlords selling their property, homeowners did the same and are now waiting for the market to cool down before buying a new home. Poirier explained these homeowners are now sitting on their proverbial mountain of cash and renting while they wait, which tightens up an already sparse selection.
When these homeowners start renting, Poirier explained they may be willing to spend more on a unit than normal, as these people are likely to have a lot of excess cash from the sale of their home, while also likely having a higher paying salary than a young person or family looking for a place to live.
"The landlords are going, 'well, you know what? If that's what it's going to be, we're going to bring those prices up and and see what the market will bear.'"
On top of these factors, Strathmore's projected growth is also playing a big role in skewing supply and demand. Poirier said builders are working hard to make housing for people all across the economic spectrum, from people looking for 1 bedroom affordable rent to a top-level executive who may want a mansion. However, the well documented supply chain issues that have been a problem since covid began still exist, so these builders aren't getting the materials they need fast enough to build with demand.
To contextualize how tight the market is: the current months of supply for houses for sale is 1.72 months. This means if no more homes went on the market, there's enough homes to sell for 1.72 months before they run out. Poirier said the ideal months of supply is 10 months, which we're currently well short of. While this stat is for houses for sale and not rental units, Poirier said these two are closely intertwined, so this number can still be used as reference to contextualize the current rent market.
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