The Fastest Growing Rents In Canada

[00:00:00] Welcome to the Canadian real estate investor where host Daniel Foch and Nick Hill navigate

[00:00:06] the market and provide the tools and insights to build your real estate portfolio.

[00:00:09] Welcome back to another episode of the Canadian real estate investor podcast. My name is Nick

[00:00:18] Hill. I am joined today by none other than Mr. Real Estate himself. Mr. Real Estate? Is that my name?

[00:00:25] Is that what you'd like to be called from now on?

[00:00:27] I don't know. I feel like I still have some ground to cover before I can rock that title.

[00:00:34] Okay, we'll stick with Daniel Foch for now, Dan.

[00:00:37] Yeah.

[00:00:38] I'm just calling, man.

[00:00:39] It's good. Yeah. We've been doing a couple of deals lately. We were looking at a place

[00:00:44] in Saskatchewan. I think we found the

[00:00:45] cheapest cash flowing property. Don't even tell anybody about it. I don't want to swoop in and spend.

[00:00:50] Yeah, we were just like joking around because we have this five day challenge going on,

[00:00:54] which you should join by the way. And the goal is like to find the best deal in Canada. Well,

[00:00:58] that's part of it. But the goal is really for you to learn as much as you can possibly about real

[00:01:02] estate in five days.

[00:01:05] Which involves looking at deals.

[00:01:07] It's going to involve looking at deals and that's really the best way to conquer analysis

[00:01:11] process is like let's look at hundreds of deals and just analyze them so that when a

[00:01:16] good deal comes up, you know it's a good deal and you just buy it rather than thinking about

[00:01:19] whether or not it's a good deal because you've already seen like you don't know until you've

[00:01:23] gone through hundreds and you're like, oh, that stands out to me as a good deal.

[00:01:27] Okay.

[00:01:28] Like, you know, when you go into a new gym and or maybe you haven't been to the gym in

[00:01:32] a while and you're walking around the floor and like there's all these pieces of equipment

[00:01:37] and there's a bunch of really good looking and strong people using them and you're like,

[00:01:40] I don't even know how to use this analogy going.

[00:01:42] Okay, there we go.

[00:01:43] LTA active is, if anyone knows that's where I work out and it's, when I first went there,

[00:01:50] and I've been working on my whole life, but I first went to this new gym and I'm looking around

[00:01:52] and I'm like walking the floor being like, I don't know what is where and where to go to do

[00:01:58] what kind of exercise. But now that I've been going all for months, I know exactly where

[00:02:03] everything is and I can go and get a workout done succinctly.

[00:02:06] And that's the exact same thing with real estate.

[00:02:07] If you are going and perusing online the first time and don't know where to go or don't know

[00:02:15] what you're looking for or which muscles you need to exercise, which real estate muscles

[00:02:19] you need to exercise.

[00:02:20] You get a personal trainer.

[00:02:23] And is that what we are?

[00:02:24] Yeah. Personal real estate trainers? Okay.

[00:02:26] We're getting carried away here.

[00:02:27] So the reality is like we just, we wanted to do this because we've been running

[00:02:31] the course. We're really enjoying teaching people how to get good at real estate

[00:02:35] investing. Because like, look, of course costs money.

[00:02:38] This five day challenge is free. The reality is in the course,

[00:02:42] we've kind of made it our personal mandate to like make sure that people save at least the amount that they've spent on the course in headaches. If you go buy a pre-con

[00:02:49] two years ago, it's going to cost you $100,000. Really, that's an expensive mistake.

[00:02:55] More and more.

[00:02:55] And so our goal is to help people avoid those expensive mistakes. The first phase of this

[00:03:00] really is joining this five-day challenge, you're going to learn how to use GRM,

[00:03:04] gross rent multiplier, to look at a bunch of deals based on the gross rents. Then you're

[00:03:08] going to learn how to calculate the net operating income based on expenses. So we go from gross

[00:03:13] to net, like Drake, what is it? Gross when I net or whatever? Drake?

[00:03:17] I don't know that line actually.

[00:03:19] I guess I listened to a lot more Drake, a better Canadian. And then we're going to take

[00:03:24] the net and NOI becomes a

[00:03:25] very important part. You calculate your cap rate from your net operating income and then what is

[00:03:29] the most important thing that we've always said and we've said this on the podcast so you know

[00:03:33] that we're telling you the truth. Who decides whether or not you can buy a property? The people

[00:03:38] giving you money, the bank. What does the bank use? They use your net operating income and they

[00:03:43] divide it by the debt service to come up with something called a debt service coverage ratio. And if it doesn't hit

[00:03:47] their criteria, then no deal. Deal or no deal, that's a no deal scenario. So that's it. Join the

[00:03:54] five day challenge. We'd love to have you. It's free. First link in the show notes and we'll see

[00:03:58] you in there. Now, before we get into today's episode, one five star review. This is a quick

[00:04:04] one.

[00:04:05] I just had to throw it in here titled kick ass.

[00:04:08] I know we don't usually swear on the podcast.

[00:04:10] You're gonna have to put a parental advisory one on this one.

[00:04:14] Invaluable resources for new and seasoned investors alike.

[00:04:17] If you're not listening to this show,

[00:04:19] what are you doing with your life?

[00:04:22] He's just shaming people.

[00:04:24] I like that.

[00:04:24] That's not from us guys.

[00:04:25] That is from a lovely listener who took the time to review the podcast named Herak.

[00:04:31] So thank you very much for that.

[00:04:33] Now, Dan, what are we doing here today?

[00:04:36] Today, we're going to be covering a report.

[00:04:38] Wow.

[00:04:39] So unlike us to cover a in-depth report and make it digestible for everyone else.

[00:04:44] So they do not

[00:04:45] have to comb through the 139 pages of great information.

[00:04:48] I know, very unlike us.

[00:04:50] But regardless, let's dive into this recent report from CMHC, the Canada Mortgage and

[00:04:55] Housing Corporation.

[00:04:57] It's called their Rental Market Report.

[00:04:58] It comes out on an annual basis and it really talks about what's happening in rental markets

[00:05:01] coast to coast, which we are the Canadian Real Estate Investor podcast on the downtown Canada, aka Toronto center of the universe

[00:05:09] podcast.

[00:05:10] A couple of Tony Toronto's.

[00:05:11] Yeah.

[00:05:12] And basically the summary is that demand for rentals is outstripped supply leading to tighter

[00:05:18] markets and reduced affordability and rents climbing, which is our income climbing, which

[00:05:22] in the five day challenge you're going to learn becomes your net operating income.

[00:05:25] Tell circles back here. So it is kind of troubling. Now the report, did it comment

[00:05:32] on national vacancy rates, which I know are a hot topic right now?

[00:05:35] Yeah. So they covered that in detail with the national vacancy rate for purpose built rental,

[00:05:41] the second best PBR acronym in the market.

[00:05:44] What's the first?

[00:05:45] Yeah, just cracking some cold folks with the boys.

[00:05:47] I think we made this joke like five times already every time we talk about PBRs.

[00:05:51] So that national vacancy rate dropped to like 1.5% but the crazy part is it's like if you

[00:05:59] look at it on a market by market basis, like some of the numbers are nuts and rent growth

[00:06:02] hit a new high, record high of 8%.

[00:06:05] So if you're a tenant right now, like, and you've been in the rental market,

[00:06:08] you're familiar with this. It is not getting cheaper to rent right now. So this suggests

[00:06:13] that most rental markets became tighter last year, despite a slight slowdown towards the end of the

[00:06:19] year. Cause rents were falling. I mean, we were talking about that October, November. I mean,

[00:06:23] they probably still are, but on a year over year basis, they can still be up that much.

[00:06:27] Yeah. So, I mean, purpose built rentals, vacancy rate at 1.5%,

[00:06:33] average rent growth hit 8%. These are quite striking numbers. Did the report go over any

[00:06:39] insights into the reason why maybe some of the supply and demand dynamics behind this

[00:06:45] kind of stuff?

[00:06:46] Yeah.

[00:06:47] So they did look at, they call it the universe of apartments, I guess that's what it's called.

[00:06:50] So like the whole-

[00:06:51] My universe.

[00:06:52] ... my universe.

[00:06:53] And there was an increase in the total number of rental units, but the supply couldn't keep

[00:06:57] up with the demand.

[00:06:58] So basically, we talk about this all the time on the show.

[00:07:01] It's all everybody talks about right now is population growth in Canada.

[00:07:04] We're now growing. If you annualize it, if you were to take, and this

[00:07:07] is don't do this because it's like there's this book called How to Lie with Statistics.

[00:07:12] This would be a statistical error if you're to do what I'm about to tell you. But if you

[00:07:15] take so Q4 of last year or Q3 of last year, population grew at 1.1% in Q4, Q3. You multiply

[00:07:24] that by four to get your annualized, it'd be 4.4% annualized

[00:07:28] national growth.

[00:07:29] That's wild.

[00:07:30] Yeah. And that would put us third in the world for population growth after Syria and South

[00:07:35] Sudan.

[00:07:36] Which is funny for a nation that isn't even keeping up with its birth rate.

[00:07:40] Yeah, I know. Well, our birth rate just fell to the record low.

[00:07:43] So yeah. So anyways.

[00:07:45] Yeah. So they recognize that immigration and population growth was a significant factor

[00:07:49] driving demand in cities like Toronto, Montreal, and Vancouver with high interventional migration

[00:07:54] as well as employment gains and low home ownership affordability boosting demand in a lot of markets,

[00:07:59] especially Calgary and Edmonton.

[00:08:02] Yeah. You know, it's intriguing to see how these various factors

[00:08:06] influence the different rental markets because it's easy to say, okay, more people need more

[00:08:10] houses, rents are going to go up, but things are different across the country. There's levels of

[00:08:16] affordability. I know the report touched on affordability, right? As always, yeah.

[00:08:21] Affordability declined obviously as rent growth. one of the big things we've been hearing about from the Bank of Canada just put it in a chart, basically

[00:08:27] charting rent growth beside population growth and like rent growth and rent inflation is one of the

[00:08:34] biggest pieces of inflation right now. So lower income.

[00:08:37] We just made that interactive graph on it as well. Yeah.

[00:08:40] Yeah. The video chart. Yeah. That was good.

[00:08:43] I like video charts.

[00:08:44] I thought it was going to go more viral than it did, to be honest. So did I.

[00:08:46] I was disappointed in your performance.

[00:08:47] But you know, I read this thing that the new Instagram algorithm can take weeks to pick

[00:08:54] up a video and then all of a sudden it can start firing off. And I've seen that with

[00:08:58] some of my videos that I made a while ago and all of a sudden they start getting shared

[00:09:03] and-

[00:09:04] Right. So let's see, what's not a reality.

[00:09:06] I think I got like 80,000 hits between the two different posts.

[00:09:10] Yeah.

[00:09:11] Yeah.

[00:09:12] Let's see.

[00:09:12] Anyways, what do you think?

[00:09:13] Should we, uh, should we look at some of the vacancy rates for these, uh, some

[00:09:20] of the major cities here?

[00:09:22] Yeah, let's do it.

[00:09:23] So I'll start things off.

[00:09:24] We'll go all the way to

[00:09:25] the West Coast, West Coast, Bescos, my hometown of Vancouver from October 22, 2022 to October 2023.

[00:09:33] Vancouver remained unchanged with a 0.9% vacancy rate. Yeah. So the biggest notable differences,

[00:09:43] if you're looking at this chart are in Edmonton

[00:09:46] and in Calgary, so in the province of Alberta, where Edmonton's vacancy rate was 4.3% last year

[00:09:56] and it dropped to 2.4%. So it dropped from 4.3% to 2.4% year over year, and then Calgary went from 2.7% to 1.4%.

[00:10:06] So both of those vacancy rates basically got cut in half almost in each of those markets,

[00:10:11] which is just extraordinary.

[00:10:13] Yeah.

[00:10:14] And then so we see massive changes in Calgary and Edmonton, the province of Alberta, but

[00:10:19] looking at the province of Ontario, Toronto remains almost unchanged from 2022 to 2023, October, where

[00:10:27] we see it going from 1.6 to 1.4.

[00:10:29] I mean, to be fair, there's not much more room to go down.

[00:10:32] No, not really.

[00:10:34] Like Vancouver.

[00:10:35] It's like, are they really going to drop much below 0.9?

[00:10:37] Like that's like your, that's the one month it takes you to lease your unit up.

[00:10:42] Yeah.

[00:10:43] Like really.

[00:10:44] And, and almost not even, that's actually like, technically people are probably getting in

[00:10:47] there a couple of days before. Ottawa, another, the good old capital of Canada here remained

[00:10:52] unchanged at 2.1% in the last two years. Montreal 2% in 2022 down to 1.5% and then Dan hit me with

[00:11:03] Canada. Yeah. So national average dropped from 1.9 to 1.5% on their large city rental markets.

[00:11:12] So vacancy rates fell in most of Canada's larger markets in 2023 with Toronto, Montreal,

[00:11:17] Calgary, and Edmonton all reporting significant lower vacancy rates.

[00:11:21] And they held steady, although historically low in Vancouver and Ottawa.

[00:11:26] Now the next chart we're going to quickly look at here is supply growth in some of these major

[00:11:34] markets. And we see that supply did grow in most markets, but not enough to prevent tightening. So

[00:11:41] we see supply grew by 2.7% in Vancouver and 3.7% in Edmonton and

[00:11:48] all the way up to 6.2% in Calgary. But then the story changes after we get a little further

[00:11:55] east.

[00:11:56] It is interesting because I'm in touch with this Edmonton supply because actually one

[00:12:00] of the members of our course gave me this deal to pitch on the podcast. He's like,

[00:12:04] oh yeah, I want to see if you guys can sell this building for us. So if you're looking to buy an

[00:12:09] $18 million brand new build vacant, still hasn't even occupied yet. Building in Edmonton at like,

[00:12:16] I don't know, somewhere around a five cap, probably low five cap is I think where the market for that

[00:12:22] would be right now. Give us a shout and

[00:12:25] prove that our podcast is a good medium for selling buildings of this sort and maybe we'll

[00:12:29] be delivering more of them in the future. But anyway, I mean, it's just like from my perspective,

[00:12:33] a reflection, the deals that we're seeing coming out of Edmonton and Calgary right now and the

[00:12:39] capital from Ontario scooping them up is just mind blowing. And even like Ron Butler who,

[00:12:44] you know, when we were at Steve

[00:12:46] Soretz's event, he was talking about that on the panel saying, I'm lucky we're licensing Calgary

[00:12:52] because otherwise we would have been bankrupt because there's nothing going on in any of the

[00:12:55] other places. The prairies is the only place in the country you can afford anything right now.

[00:12:59] Where are you going to cash flow a deal in the Greater Golden Horse? Peterborough, I guess.

[00:13:04] We're just starting to see deals.

[00:13:05] We just did two deals in Peterborough, three deals in Peterborough.

[00:13:07] At a cash flow.

[00:13:08] South Green, South Green, South Green, South Green, South Green, South Green, South Green,

[00:13:09] South Green, South Green, South Green, South Green, South Green, South Green, South Green,

[00:13:10] South Green, South Green, South Green, South Green, South Green, South Green, South Green,

[00:13:11] South Green, South Green, South Green, South Green, South Green, South Green, South Green,

[00:13:12] South Green, South Green, South Green, South Green, South Green, South Green, South Green,

[00:13:13] South Green, South Green, South Green, South Green, South Green, South Green, South Green,

[00:13:14] South Green, South Green, South Green, South Green, South Green, South Green, South Green,

[00:13:15] South Green, South Green, South Green, South Green, South Green, South Green, South Green,

[00:13:16] South Green, South Green, South Green, South Green, South Green, South Green, South Green,

[00:13:17] South Green, South Green, South Green, South Green, South Green, South Green, South Green,

[00:13:18] South Green, South Green, South Green, South Green, South Green, South Green, South Green,

[00:13:19] South Green, South Green, South Green, South Green, South Green, South Green, South Green,

[00:13:20] South Green, South Green, South Green, South Green, South Green, South Green, South Green,

[00:13:21] South Green, South Green, South Green, South Green, South Green, South Green, South Green,

[00:13:22] South Green, South Green, South Green, South Green, South Green, South Green, South Green,

[00:13:23] South Green, South Green, South Green, South Green, South Green, South Green, South Green, South Green, South Green, South Green, South Green, South Green, South Green, talking about doing deals because they're possible again. That'd be nice. Yeah. Okay. So take me through Toronto to my trail here.

[00:13:27] Yeah. So Toronto supply, this is always fascinating. So Toronto supply dropped by 0.5%. Now,

[00:13:33] the reason for this is because basically like a bunch of houses get demoed to later be replaced

[00:13:38] by-

[00:13:39] Or they get lit on fire because people can't afford them. So it's not like their supply did decrease. It just got moved away for a minute and then

[00:13:52] it'll increase eventually. Ottawa up by only 0.6% on rental supply. It explains why we're not seeing

[00:14:00] affordability improving at all in the province of Ontario. Then Montreal saw an increase of only 1.8%, giving us a nationally average increase in

[00:14:09] rental supply of just 1.7%.

[00:14:12] Yeah. So even after some major dips in 2022, the market was still holding steady for the

[00:14:19] most part. Vancouver's still the major player in Canada. Meanwhile, Calgary and Edmonton

[00:14:24] saw some pretty big drops taking their vacancy rates to under

[00:14:27] 3%.

[00:14:28] And it sounds like Alberta's major markets are seeing more folks wanting to rent their

[00:14:34] places probably because of their solid demographics in the job situation.

[00:14:40] And we see some different action happening in Montreal.

[00:14:43] Their slide wasn't as big as other major markets.

[00:14:47] But what happens in this city usually sets the trend nationwide thanks to their large

[00:14:54] rental market.

[00:14:55] Now, just to give you an idea, in 2023, it made up a whopping 28.4% of the rental scene. That's more than the next two biggest markets,

[00:15:06] Toronto 14.6% in Vancouver with 5.5% put together.

[00:15:11] That is wild.

[00:15:12] I didn't know that they accounted for such a large amount

[00:15:14] of the total rental universe.

[00:15:16] Yeah, I mean, Montreal is killing it.

[00:15:18] And you hear that and you see that

[00:15:20] with the poll that they have.

[00:15:22] And anytime you talk to an investor, and we've actually

[00:15:26] got some great investors from Montreal in our realist community. So we get a little

[00:15:32] bit of inside scoop there and fascinating market up there. And just to see that it dwarfs

[00:15:37] Toronto and Vancouver put together is fascinating.

[00:15:39] It is interesting because I was just looking at single family deals for the purpose of

[00:15:43] the five day challenge and building out some of the content for that and looking at some of these tiny

[00:15:47] deals in Saskatchewan, these $50,000 houses. We're talking tiny, yeah. Literally like 50

[00:15:52] grade. Yeah, it's like the down payment on an investment you'd buy anywhere else.

[00:15:55] And the point of this exercise was I wanted to see if I could find deals that had 20% cap

[00:16:02] rates. And I did, by the way. I did literally find deals that were cashflow positive and would break even in six, seven, eight years. It's like the point being

[00:16:10] that Quebec really surprised me at how cheap deals are there. And there's some reason

[00:16:15] capital just isn't super interested in that market. And Saskatchewan, same thing.

[00:16:19] And I think people are really sleeping on some of these cheaper markets. Because it's like that

[00:16:23] rising tide lifts all boats phenomenon. It's like if you have population growth that

[00:16:27] is so unignorably massive in Canada, it has to spill over to some other places.

[00:16:32] I think one of the things that the final piece that I'll mention is that if we start seeing,

[00:16:36] which it seems like Canadian government from a policy perspective, I mean, we know all the

[00:16:40] stuff that was happening between Canadian government and the Indian government, going back and forth

[00:16:43] and blah, blah, blah. Again, we try not to touch on politics too much on the show,

[00:16:46] but we're thinking about cause some of these things can affect our investment

[00:16:51] decisions. What you're starting to see happen is as the Indian international

[00:16:56] student population declines,

[00:16:57] we're starting to see it replaced with a lot of people from the African

[00:17:00] subcontinent. And the most interesting part from my perspective there is the

[00:17:03] third most commonly

[00:17:05] spoken language in Africa. What is it? Is it English? No, it's French.

[00:17:09] There you go.

[00:17:11] I think people are really sleeping on Quebec as a long term. I think it seems like unignorable

[00:17:16] that every politician in Canada is in agreement that that century initiative of getting Canada's

[00:17:21] population to 100 million people eventually is probably going to take place.

[00:17:25] Well, I was at the CBRE market outlook this morning and I got to hear Ben Tal speak and

[00:17:32] we both heard him and I think he's spoken alongside him like you, Dan.

[00:17:36] Very very intelligent man and very well spoken.

[00:17:39] No, Ben Tal is the best but he's so funny.

[00:17:43] He's just figured out how to like really tap it.

[00:17:44] He wasn't funny this morning

[00:17:45] He would but he was very very no way wasn't I mean it started off grim and he even said he's like hey

[00:17:50] Listen, if you want to find doom and gloom, it's easy

[00:17:53] And he also got a lot of really

[00:17:55] Yeah, you've heard of a lot of really great points

[00:17:57] And I think we're gonna do a I think we're gonna cover that report on on the podcast

[00:18:02] So I'll bring up some more stuff when we do that.

[00:18:05] But he was talking that the kind of the goal for that he's been hearing about in I guess

[00:18:11] the upper echelon of politics and economists is that Canada is potentially about to double

[00:18:18] their population.

[00:18:19] So we could be at 80 million people in 26 years, which is insane.

[00:18:24] Yeah.

[00:18:25] I mean, I don't know how you-

[00:18:26] It's about being 3.5 million homes short.

[00:18:28] Ben Tal thinks it's 5 million short already.

[00:18:29] So he thinks we're a million and a half short of what we're already short of.

[00:18:33] But I mean, we would need double that.

[00:18:34] I would agree with that.

[00:18:35] I know, like it just strengthens my position.

[00:18:38] If you've listened to the show for a long time, you know that I literally think that

[00:18:42] every house in Canada is going to be fourplex eventually. Not like that's

[00:18:46] obviously being hyperbolic, but we called them up zoning the entire country. Like two years ago,

[00:18:52] I was literally like, they're going to up zone the entire country. And fortunately, I was right

[00:18:57] in that call. If you're not trying to identify the opportunity in converting single-family

[00:19:03] residential properties to multiplexes in

[00:19:06] this country. Mitch gave me a really good pitch in this. For those of you who don't have context,

[00:19:09] Mitch is our business partner in the course. He's an absolutely brilliant guy. He was like,

[00:19:15] look at Tesla as an example. Tesla's like this girl. Any business that was able to experience

[00:19:21] exponential growth, they just rode exactly what the government was telling them to do. Hey, we want electric vehicles. Okay. Electric vehicle company,

[00:19:28] they're just pumping in all this grant money and all this other stuff. And so at that point,

[00:19:36] and he gave a couple of other examples as well, but at that point, you might as well think, okay,

[00:19:40] what can I do as an investor in Canada to capitalize on what the government is telling

[00:19:44] me to do? This isn't a secret. They're like, hey, we're going to make it so you can put four units

[00:19:49] on any residential lot in the country basically. Hey, we're going to provide the best financing

[00:19:54] in the market, longest amortization, highest loan of values for multiplexing through CMH,

[00:19:59] CMRI select. I know you're doing a ton of those deals all over the country.

[00:20:02] Yeah.

[00:20:02] Doing them in Manitoba now. And a lot of those builders were billed for sale guys, right? And now they're switching over.

[00:20:11] Because-

[00:20:11] And you know it's real if billed for sale guys are switching to rentals. Because everyone would

[00:20:17] think all builders would love to own rentals. It's like try convincing a lifetime builder who

[00:20:21] just has been selling houses for a living to want to own those houses and it's not that easy. Nick and I try and do it every single day by pitching actually,

[00:20:28] like literally pitching them like, hey, nice subdivision you got there. It'd be a shame

[00:20:32] if somebody slaps a memo I select financing on it.

[00:20:35] It'd be a shame if you had to hold onto it for the next 50 years.

[00:20:37] Yeah. Imagine your grandpa steadfast, you know what I mean? Just like unshakable in his ways. Like that's like who a lot of these guys are and they don't want

[00:20:50] to change and, but they are because it's the only way the numbers make sense now because nobody's

[00:20:54] buying these houses or not. A lot of people are buying these houses and a lot of people are

[00:20:57] renting them. It's just the, that's it. So, and that's what this report's all about is,

[00:21:03] is when, and wait till we get to, so what we're

[00:21:05] going to do after we've got a couple more little pieces here, but we'll start to get

[00:21:09] into market by market, every major market across the country, almost every major market

[00:21:14] across the country.

[00:21:15] Yeah, they really let down.

[00:21:16] The vacancy rates are just wild.

[00:21:18] Yeah, it's crazy.

[00:21:19] Yeah, they really let down the East Coast, honestly.

[00:21:21] I know.

[00:21:22] I know.

[00:21:23] This is not us East Coers who listen to that.

[00:21:25] We have a small East coast fallen.

[00:21:26] I would love, I know we're going to do.

[00:21:30] The average national rent increases reach a new peak as main rental

[00:21:35] markets are getting tighter.

[00:21:36] So the common two bedroom purpose built rentals, there's a sharp acceleration

[00:21:40] to 8.8 0% from 5.6% over the previous year, which is like to say 5.6 is the lower number.

[00:21:49] 5.6% rent growth is like you can only index rent at inflation in most provinces that are

[00:21:56] rent controlled or close to it, 2.5%, 3%. Market rent is growing at 8. It grew at 5.6,

[00:22:04] 2 years ago and then 8% last year.

[00:22:06] So like in the past two years, rents have gone up in double digits. And with the demand that

[00:22:13] we're seeing that's outlined in this report, I wouldn't like other than the downtrend that

[00:22:17] we're seeing right now, I would argue that this is a trend that could probably sustain itself.

[00:22:21] So anyway, it's a big record even above the peaks of inflation

[00:22:26] in the 1990s and way above the long-term average of 2.8% annual rent growth. So that kind of gives

[00:22:34] you that idea of that inflation number, right? So anyway, rent increases are obviously out pacing

[00:22:40] both inflation, which is kind of in that 3% to 4% range, I guess below 3% right now, but I feel

[00:22:44] like that's a little bit of a- So here's another crazy takeaway from this morning,

[00:22:49] and I did not know this, but Canada and the Bank of Canada are the only country in central bank in

[00:22:55] the world that include mortgage interest payments as part of CPI inflation.

[00:23:05] So if we took that out, Ben Tal, again, going back to Mr. Tal, he's saying that we're down

[00:23:09] at 1.5% right now.

[00:23:11] Right.

[00:23:12] Well, I mean, that would suck because we would be kind of in that close to deflation.

[00:23:16] So that's what he was saying.

[00:23:17] He's like in the Bank of Canada has overshot by minimum 50 basis points.

[00:23:21] I feel like that's true.

[00:23:23] And I would say that's something that we called that was something that we called

[00:23:26] on the show probably a year ago when we were in the midst of the biggest hiking

[00:23:30] cycle in decades.

[00:23:31] So yeah.

[00:23:32] Yeah.

[00:23:32] It's interesting.

[00:23:33] Yeah.

[00:23:34] If you want to get inside the crystal ball that we use to, to come up with these

[00:23:38] great predictions.

[00:23:39] We sell them on the website.

[00:23:39] No, that'd be a great thing.

[00:23:41] That'd be a good piece of merch.

[00:23:42] Such a good piece of merch.

[00:23:43] Such a good piece of merch.

[00:23:44] Real estate crystal balls. That's a great idea. Sell a good piece of merch. That'd be such a good merch. Real estate crystal poles.

[00:23:46] That's a great idea.

[00:23:47] Sell it to people who give out bad.

[00:23:49] Okay, expect to see those for the next Christmas.

[00:23:52] That's going to be Christmas.

[00:23:55] So I guess rents are outpacing both inflation and wage growth.

[00:23:59] So it seems like we're probably getting into a worse environment for rents.

[00:24:04] This sucks for tenants.

[00:24:05] It's great for landlords, right? Well, yes and no. I mean, it's great for landlords

[00:24:11] that have the ability to raise rent. There's a lot of landlords out there that are stuck with

[00:24:16] tenants who are locked in at certain rents, and those landlords are facing the challenges of

[00:24:23] inflation and rising interest rates.

[00:24:25] Even if you see a lot of people starting to offload, that's why we see a lot of people

[00:24:29] starting to offload deals, right? I mean, even if you're not rent-capped,

[00:24:33] like there's also like even in like Alberta, Saskatchewan, whatever, it's like, you know,

[00:24:39] you can only increase rent so much until somebody's like, I can't afford this anymore.

[00:24:43] And you know what I mean? And so a lot it is like, we're bumping up against an affordability

[00:24:47] issue because Canadians are just like, they just can't afford to exist.

[00:24:52] And shelter is a huge component of that.

[00:24:55] Right.

[00:24:55] Yeah.

[00:24:55] So.

[00:24:56] Yeah.

[00:24:56] I mean, so when it comes to the cost of renting Vancouver, good old

[00:25:01] Vancouver is still at the top of the list.

[00:25:04] 20, almost $2,200 is the average monthly rent

[00:25:08] for a two bedroom purpose built rental

[00:25:11] with Toronto right behind that at just under $2,000.

[00:25:14] And on the other hand, the most affordable places to rent,

[00:25:18] get this, mostly in Quebec and Montreal,

[00:25:21] where you can get a two bedroom for around $1,100. And that is a bargain if

[00:25:29] you ask me compared to some of the other big cities that are highly desirable to live in

[00:25:33] in this country. So why is the demand for rental so high? You ask, well, here are a few reasons.

[00:25:39] More people are moving to this country. You've probably heard us mention that a few times.

[00:25:45] And newcomers usually rent before they decide to buy.

[00:25:48] I think the actual stat is on average newcomers rent

[00:25:52] for at least three years before buying.

[00:25:54] Now again, when I was just in Winnipeg a few years ago,

[00:25:57] we met with a lot of investors.

[00:25:59] I met with some people that were working in restaurants,

[00:26:02] some Uber drivers, and every single one of them that was a newcomer to the country had moved to Toronto first, not liked it or not

[00:26:11] been able to cut it there and had found themselves in Winnipeg.

[00:26:14] There has also been a boost in jobs for the 15 to 24 year old age group.

[00:26:21] And guess what?

[00:26:22] Young people rent because I don't know any 15 year olds that own homes.

[00:26:26] Do you?

[00:26:27] No, I don't know any 15 year olds that rent their houses though either. I feel like the

[00:26:33] stay at home age is like creeping up on 35, 40 at this point.

[00:26:38] Yeah. More people are just opting to rank because at the end of the day, let's face

[00:26:43] it owning a home isn't cheap these days.

[00:26:46] In fact, it's the exact opposite.

[00:26:47] It's more expensive than ever.

[00:26:50] And that's the big thing.

[00:26:51] They outlined this a lot in Alberta in Calgary and Edmonton, and actually Regina and Saskatchewan.

[00:26:57] And I did a full page turn on this report for the realist.ca course, so I'm very familiar

[00:27:01] with the report.

[00:27:02] But as a landlord in markets like Regina and

[00:27:10] Edmonton as an example, you are competing with homeownership, right? Like you're not, you know what I mean? Like most people who aren't going to rent are going to decide not to rent

[00:27:14] are going to just go and own. And so as those markets become less and less affordable,

[00:27:19] which is happening as Ontarians go there and start to ruin everything,

[00:27:22] you know, like and just start bidding wars for fun.

[00:27:25] Like, cause that was, you know what I mean?

[00:27:26] We love these over here in Ontario.

[00:27:28] Yeah.

[00:27:28] Yeah.

[00:27:28] You got to, have you tried the sport yet?

[00:27:31] And, uh, yeah, so as that takes place, then it's going to put more and more

[00:27:36] pressure in the fullness of time on markets like that.

[00:27:38] It's just like the spillover effect or like trickle down economics.

[00:27:41] Some people might say like, just,

[00:27:42] I had this idea for this Instagram video and I

[00:27:45] still might do it. I just need to figure out the way to do it. But it was like, imagine Ontario

[00:27:50] as this glass of water. And then I just keep pouring more and more water into it. And it

[00:27:54] just keeps spilling over and over. And that's the rest of Canada. Yeah. You need to make it a

[00:27:58] champagne tower. Ooh. There you go. Too expensive. I'm a water guy. You could probably find some

[00:28:01] There you go. Too expensive.

[00:28:02] I'm a water guy.

[00:28:03] You could probably find some restaurant who would want to...

[00:28:07] You could just work in an influencer drill, probably.

[00:28:09] Don't you think?

[00:28:10] You guys like real estate here at the KEG?

[00:28:12] Yeah.

[00:28:13] You guys want to do an influencer video?

[00:28:15] I would love to...

[00:28:16] Hey, the KEG.

[00:28:17] If you're listening, Dave and I both literally love the KEG.

[00:28:20] I think so.

[00:28:22] Both our girlfriends love it as well.

[00:28:23] I printed out a picture of a Billy Miner pie on my vision board because I want to be rich

[00:28:26] enough to have Billy Miner pie for my all my birthday parties.

[00:28:30] So anyway, that's a great story.

[00:28:33] Yeah, I'm looking at it right now.

[00:28:35] It's delicious.

[00:28:36] Looks delicious.

[00:28:37] So they go on to say demographic changes actually boosted demand and had different impacts depending

[00:28:41] on a region and this is an interesting part, right?

[00:28:42] Because we do have a lot of young people in the country.

[00:28:44] So as they get to the age of rentership, you know, like get out of

[00:28:47] mom and dad's house or whatever, if they don't live in Ontario and can afford to...

[00:28:52] Which used to be like 19?

[00:28:53] Yeah.

[00:28:54] Yeah.

[00:28:54] 18, 19, 20 kind of thing.

[00:28:55] Well, I guess like there is that thing where people, when they're done high school, like a lot

[00:28:59] of kids go to university or college and they go and live in a different town. And so they technically

[00:29:03] are entering the rental pool.

[00:29:05] Student rentals. Yeah, for sure. Yeah. I mean, if, yeah, usually, I mean, we did that.

[00:29:08] We just did that episode on student rentals, right?

[00:29:09] Everyone spends first year on campus and then most people go and rent elsewhere.

[00:29:13] And most people are graduating university by their early twenties to say 21.

[00:29:17] So then you were talking about 15 to 24 year olds here.

[00:29:20] You still got a couple of years after that.

[00:29:21] Good enough for sure. Thank you. Um,

[00:29:24] you got my calculator out.

[00:29:25] So there was a bit of a boom in the population aged 15 to 24 in Canada.

[00:29:30] And I guess a lot of that would be those students coming from international through

[00:29:33] international migration, international students after a rather slow growth in 2022.

[00:29:37] And so this age group outpaced the others in terms of growth in 2023 in most provinces.

[00:29:42] And so again, if all of those people will stick around and can make it and enjoy

[00:29:46] being part of the Canadian economy, then that's a big increase in future tenants.

[00:29:52] Yeah.

[00:29:52] And, and, and that future pool of renters, that 15 to 24 year old Alberta was the

[00:29:59] magnet for that age group with a growth rate that left the national average in

[00:30:04] the dust.

[00:30:05] And it's probably because a lot of working age folks were moving between

[00:30:09] provinces and picking Alberta as their new home, right?

[00:30:12] We, we saw so much inter-brivencial migration.

[00:30:14] We've talked a lot about that on the show.

[00:30:16] Alberta seemed to be the top choice for a lot of these movers and it's still

[00:30:21] looking like a popular choice in 2024.

[00:30:25] Now you can bet that the job growth in Calgary

[00:30:28] and Edmonton combined with the cheaper houses

[00:30:30] compared to those in Toronto and Vancouver

[00:30:34] probably played a part in attracting

[00:30:37] all of those younger people.

[00:30:39] And if you talk to people in Calgary,

[00:30:41] they'll tell you it's a young city.

[00:30:43] Yeah, for sure.

[00:30:44] And you know what, I Calgary, they'll tell you it's a young city. Yeah, for sure. And you know what?

[00:30:45] I mean, let's say a $60,000, $70,000 entry level job, well, you're living with roommates

[00:30:52] or in a crappy basement or way outside of the city, or you're getting help from family

[00:30:58] if you're living in Toronto or Vancouver.

[00:30:59] You can go live a nice life in Edmonton.

[00:31:01] Man, I feel like wages are really like the one thing that stands in the way of Toronto,

[00:31:05] like becoming an actual world city, you know, like, I've said this, I need a lot of

[00:31:11] hate for this, this one.

[00:31:12] Um, careful.

[00:31:13] Yeah.

[00:31:13] I tweeted this the other day.

[00:31:15] I said, don't underestimate Toronto's ability to, to unbecome Canada's city,

[00:31:20] you know, like look at what happened in Montreal.

[00:31:22] And like some people would say, Oh, that was the language rules or FLQ stuff that was happening in the 90s,

[00:31:27] like separatist movement, whatever it was. But the point is that whatever caused it,

[00:31:32] I don't know, because I was born when that stuff started taking place, it happened.

[00:31:37] And similar policy mistakes or social mistakes or wage, compensation mistakes could comparably destroy Toronto.

[00:31:49] To me, when you have a huge migration of young people out of a market into another market,

[00:31:55] in especially seeing literally, I just posted this video on Instagram of young people, 20

[00:32:01] somethings are like, they're leaving Ontario at the fastest pace they ever have and they're going to Alberta and the East Coast.

[00:32:09] I'm 35 this year. I've got a brother that's 10 years younger than me. Guess where he lives?

[00:32:13] Alberta. Yeah. Yeah. He's living like probably like he's like the only person in Ontario that

[00:32:17] can afford his rent because he doesn't live there. Like actually, I don't know.

[00:32:22] Yeah. Yeah. Like actually, I don't know. Yeah. Yeah. So anyway, and so, yeah, there's obviously been a lot of rental demand in pushing us

[00:32:32] to new highs in Toronto, Montreal, Vancouver, but it ends up spilling over.

[00:32:35] And so those markets are obviously the destination for a lot of international students.

[00:32:38] But I guess when inflation and rents are growing faster than income, as we acknowledged earlier,

[00:32:45] that they mentioned in the report, it's understandable that many households have

[00:32:49] had more difficulty paying rent. A lot of major centers saw increases in arrears,

[00:32:54] so people not paying rent. This is an important trend to watch for,

[00:32:57] when you're looking for a recessionary signals as a landlord. We were talking about this a couple

[00:33:01] of quarters ago, saying, we're getting

[00:33:05] that phase where you got to be offering workouts to your tenants. I told you, I had a tenant

[00:33:10] who was like, I can't be able to pay rent like this month. I think I can get caught up. They

[00:33:16] asked if they get out. They just needed a gap. Can I allocate my deposit to... And just for me,

[00:33:22] mechanically, I was like, I'd rather work at a payment plan. Cause I know that the landlord and tenant boards are going to want to see that anyway.

[00:33:28] Let's add it to the remaining months and, and could we work something like that out?

[00:33:32] But you know, you're starting to see this stuff happen.

[00:33:33] And so these are things that you really got to pay attention to as a landlord.

[00:33:36] So as a result, then the share of purposeful rental units in a rear is increased

[00:33:39] from 6.5 to 7.8% in, in 2023.

[00:33:44] So yeah. So over a full percent in, in less than a year and among major city centers, 6.5 to 7.8% in 2023.

[00:33:45] Yeah, so over a full percent in less than a year.

[00:33:48] And among major city centers,

[00:33:49] Toronto had the largest increase in arrears.

[00:33:53] This left its arrears rate over twice the national average

[00:33:57] at 19.6% in Vancouver was 4.1%, Montreal was 4.4,

[00:34:02] Ottawa was 5.9 and had higher arrears rates, but they remained well

[00:34:08] below Toronto's rate. Calgary 5.8%, Edmonton 5.6%, arrears rates were lower in 2023 and remained

[00:34:16] well below Toronto as well. Lower income renters face the additional challenges of especially low

[00:34:22] supply and low vacancy rates

[00:34:25] for the most affordable units in Canada's major markets.

[00:34:30] And then rental condos, which we know a lot of people who are buying those and Urbanation

[00:34:36] came up with that report saying basically half of them were cash flow negative.

[00:34:39] Against our advice.

[00:34:40] They were definitely not listening to the podcast.

[00:34:42] Yeah, no.

[00:34:43] If only we came out like three years earlier, I imagine not a money we could have saved people if we just said, hey,

[00:34:48] don't do it.

[00:34:49] Hold up.

[00:34:49] Don't do it.

[00:34:50] We could add a negative impact on all that housing creation though.

[00:34:54] Yeah.

[00:34:54] We need those people to lose money for condos to get built.

[00:34:58] 20% of all rented units is rental condos in Canada, which is wild in the 17 surveyed cities across Canada

[00:35:06] with two-thirds of them in Toronto and Vancouver. The dynamics of the first built rental market

[00:35:10] drove the rental condo market as well. So we're seeing obviously vacancy rates for condos drop

[00:35:15] from 1.6 to below 1% and the average rent grew from 1900 to 2050. So lower vacancies and higher rents despite growth of the number of condos by 6%,

[00:35:30] we saw 6% increase in condo supply still led to increase in rents in condos. So supply just

[00:35:37] isn't cutting it. And that's like, this is a theme right now. I wish I, I'm really not bullish on

[00:35:43] Canada or Canadian real estate. I think we're not heading

[00:35:45] in a good direction. Things are bad for Canadians, right? But the reality is, obviously, supply is

[00:35:51] outpacing demand and it's going to cause rents to go up. I don't know what it's going to do with

[00:35:53] prices, but that doesn't matter to me because I think about the yield that a asset can produce

[00:35:58] and that is what rent is. Yeah, great point. So with all that being said, the next part here is we're going to go through

[00:36:05] all the major markets covered in the report. We'll look at vacancy rates and prices for both

[00:36:11] purpose-built rental and condominium apartments, and then we'll look at some of the market

[00:36:17] highlights that the report shed light on as well. So I'll start us off here with beautiful Vancouver

[00:36:24] I'll start us off here with beautiful Vancouver. Purpose-built rental market, we saw a vacancy rate of 0.9% and the average two-bedroom rent

[00:36:29] was $2,181 and that was up 8.6% from the year before.

[00:36:36] Compared to the condominium apartment market, which had the exact same vacancy rate, which

[00:36:41] we discussed at the top of the show, 0.9%. However, the price for your average two bedroom rent

[00:36:49] was several hundred dollars more expensive

[00:36:50] at almost $2,600.

[00:36:53] So the 0.9% vacancy rate was consistent

[00:36:57] with rental demand fueled by high immigration

[00:36:59] and less affordable home ownership.

[00:37:02] The rental universe expanded by 2.7% overall,

[00:37:06] primarily due to new developments in Vancouver and Surrey. Two-bedroom rents

[00:37:13] increased by an average of 8.6% due to high turnover rates. An affordability

[00:37:18] decline for low-income households as vacancy rates for affordable units were

[00:37:23] below average and rent took up

[00:37:25] a larger portion of their income. That is a familiar story across the country. I can

[00:37:31] promise you that.

[00:37:32] Moving on to the next best city in Canada starts with a V. Maybe in British Columbia

[00:37:39] that starts with a V. Victoria, purpose built rental vacancy rate at 1.6%, condo market vacancy rate, basically zero.

[00:37:47] Literally 0.1%. It doesn't get closer to zero.

[00:37:52] Yeah. Yeah. So vacancy rate rose in purpose-built rental as I guess renters were absorbing a lot of

[00:37:58] the new supply that's being created. And obviously high immigration and a strong labor market boosted

[00:38:03] rental demand in Victoria.

[00:38:05] So the average rent for two bedroom apartments increased by 7.9% while rental stock expanded

[00:38:10] by 5%, particularly in the Langford area. Affordability for low income earners declined due

[00:38:16] to wages not keeping up with rent increases. And so there's a lot of pressure on the affordable supply area of the Victoria rental market. Now going east, we

[00:38:28] stop in Edmonton where the purpose-built rental market saw a vacancy rate of 2.4% and the average

[00:38:34] two bedroom rent was just under $1,400 up by 6.4% from the year before. The condo apartment market had a 2.5% vacancy rate. And I mean,

[00:38:47] these numbers are really close. The average two bedroom was $1,360 compared to $1,398.

[00:38:53] So the vacancy rate for rental apartments actually dropped to 2.4% in 2023, the lowest

[00:39:02] in nearly a decade due to all the increased demand, and that demand

[00:39:07] was driven by stronger demographic and economic growth.

[00:39:11] However, the rising rent and falling vacancy rates posed, guess what, affordability challenges,

[00:39:19] particularly for lower income households, and the secondary market grew as more condominiums were offered

[00:39:25] as long-term rentals at comparable rents.

[00:39:30] Edmonton has the highest home buying repayment affordability out of all the largest cities

[00:39:34] in Canada, which you're seeing a huge drive for people to move to that country or city.

[00:39:41] They could become a country.

[00:39:42] Who knows?

[00:39:43] There are a million people now.

[00:39:44] There you go.

[00:39:47] Calgary is even tighter than Edmonton. Definitely seeing a lot of that growth.

[00:39:53] Those Alberta is calling ads are obviously working.

[00:39:57] Are they still calling?

[00:39:58] I don't know. I haven't seen any of those ads ever.

[00:40:00] Please stop calling.

[00:40:03] We have What's That Called in Ontario, the do not call list.

[00:40:06] Calgary just made it. So 1.4% vacancy rate for purposeable rentals in Calgary, $1,700

[00:40:17] two bedroom rent on average. By the way, most of these estimates are low. So if you're going to

[00:40:21] send us a message or leave us a review saying- They pay way more than that. Yeah, we know. So do we.

[00:40:26] We didn't make the report and we know it's not accurate. But the interesting part is that

[00:40:31] rents grew 14.3% in Calgary on a year over year basis. So yeah, I mean, like if you think about

[00:40:38] that, especially because it's a market with no rent control, if you're a landlord in Calgary,

[00:40:42] you could just increase your gross income by 14.3% on a year over year basis based on that data point. Condo market, very similar.

[00:40:50] 1% vacancy rate, average two bedroom rent over $1,800. In 2023, the vacancy rate fell

[00:40:57] from a decade low, fell to a decade low of 1.4% with rising demand, outpacing supply.

[00:41:03] They're building a lot there. We know,

[00:41:05] we've done it, we've done studies on it on the podcast where-

[00:41:08] They're out there and seeing it ourselves.

[00:41:09] They build. They definitely know how to build. But affordability remains an issue and vacancy

[00:41:14] rates for cheaper units is staying below 1%.

[00:41:17] Now over to, is this, did we figure this out, the Paris of the prairies?

[00:41:22] Yeah, it is Saskatoon.

[00:41:23] Okay, nice. The Paris of the prairies, the Tragically Hip will be proud of us.

[00:41:28] In 2023, Saskatoon's economic and rental growth was driven by increases in employment, population

[00:41:35] and outside investment.

[00:41:38] Supply did lag behind demand, dropping the vacancy rate to 2%.

[00:41:43] That is the vacancy rate for purpose built rentals with the average two

[00:41:46] bedroom unit being $1,360 up 9%. Saskatoon had the Prairies CMA's highest turnover rate at 36.5%

[00:41:59] up 3% from the previous year. Rent growth for two bedroom units was consistent with other

[00:42:06] Western provinces. Only 5% of rental units were affordable for low income families. We

[00:42:11] also see the condo apartment market have a vacancy rate, super low vacancy rate of 1.2%

[00:42:19] average rent for a two bedroom condo apartment, $1,450.

[00:42:26] Then moving over to Regina, vacancy rates between 1.4 to 1.8%

[00:42:32] lowest since 2013, especially in newer units in the Northwest and

[00:42:36] university areas, rising demand push rents up by 7.9%, the highest

[00:42:40] increase since 2009, great year for real estate. Despite reduced affordability in

[00:42:45] 2023, Regina's rentals are still cheaper compared to regional markets. And so what happens? More

[00:42:50] people move there and it's got more runway to go, I think. And those sweet $50,000 deals that we're

[00:42:56] looking at are going to be $75,000 deals before we know it. Yeah. There you go. Now over to another

[00:43:03] beautiful city, which I just returned from and was a big fan of,

[00:43:07] incredible architecture in Winnipeg.

[00:43:09] I'm not kidding.

[00:43:10] Like, like-

[00:43:11] Do you want to do your history lesson?

[00:43:13] Yeah.

[00:43:14] No, because we'll do a full episode on Winnipeg.

[00:43:16] I just have to write it.

[00:43:18] Here's a cool fun fact though.

[00:43:20] Back right before the Great Depression, so basically 100 years ago, Winnipeg was bigger

[00:43:27] and faster growing and set to be a bigger city than Chicago.

[00:43:32] Did you know that Halifax was apparently on track to be bigger than New York until the

[00:43:37] Halifax explosion?

[00:43:38] Well, did you know?

[00:43:39] No, I'm just kidding.

[00:43:40] I got nothing else about it.

[00:43:41] There you go.

[00:43:42] No, it is interesting to hear that because earlier in this episode, I said that

[00:43:48] cities can usurp one another in their, you know.

[00:43:51] There we go. Chicago ate up Winnipeg and spit it out.

[00:43:54] Chicago, damn you, Chicago.

[00:43:56] But Calgary could do that to Toronto if they keep stealing all of our young people.

[00:44:00] If they don't stop those, Alberta is calling ads.

[00:44:02] Guys, stop it. Don't pick up that call.

[00:44:04] I'm just kidding.

[00:44:05] Calgary is a great place.

[00:44:06] So anyway, back to Winnipeg.

[00:44:07] The main rental market tightened, particularly in the suburbs with lower vacancy rates and

[00:44:13] higher rent growth, despite this rent growth was modest compared to other prairie cities.

[00:44:18] And rent-exempt two bedrooms units likely caused the 4.4% rent growth and that is for the purpose

[00:44:26] belt rental market.

[00:44:27] We're seeing those, even though they're up by 4.4%, you still can get an average two

[00:44:32] bedroom rental for $1,427 and the vacancy rate is tight at 1.8%.

[00:44:38] It's the same vacancy rate at 1.8% for the condo market, but you actually pay less money for a condo, a two bedroom condo

[00:44:46] than you do for a purpose-built rental. You're only paying $1,333. So pretty good deals still

[00:44:53] to be had in Winnipeg. Now over to Ontario, Dan, with the first stop on the list.

[00:45:00] Good old fashioned Hamilton. 2.1% vacancy rate, 2.6% for condos increased slightly in,

[00:45:08] um, but it's still the second lowest in 21 years, the last year being the lowest. High

[00:45:13] immigration and limited home ownership, obviously a big spillover from the, from Toronto into

[00:45:18] Hamilton. It's functionally part of the GTA now at this point. Um, two bedroom rents rose by a record 13.7% even though vacancy climbed up.

[00:45:26] And so, I mean, you know, yeah, it is nuts. And the condominium apartment vacancy rate

[00:45:32] reached a record 2.6% due to surge in supply and increasing unaffordability. So,

[00:45:39] like so condos have never actually had a vacancy rate this high yet rents are still climbing.

[00:45:43] Wild. That makes sense.

[00:45:45] Yeah.

[00:45:46] Now over to, how did London, England make this list?

[00:45:49] Bad.

[00:45:50] That's bad.

[00:45:52] Nobody's ever made that joke before.

[00:45:54] London, where we've got a purpose built rental vacancy rate of 1.7%, which is huge compared

[00:46:03] to the condo vacancy rate of 0.1%.

[00:46:06] I also love how you skipped Kitchener, Waterloo, Cambridge and Windsor.

[00:46:10] Yeah, well, kitcheners, I'll do them quickly because why not. Similar 0.1% vacancy rate,

[00:46:20] 2.1% on purposeful rentals. And then Windsor was interesting because Windsor's like one of those legacy like investor markets, low rents, uh, 1200, but up 6.5% of vacancy rates.

[00:46:30] 2%.

[00:46:31] So, you know, I purposely purposely left Windsor because I'm pretty

[00:46:35] bullish on Windsor, I think.

[00:46:36] Oh, you're trying not to share the wealth.

[00:46:38] Because every time we share a market that we like, everyone

[00:46:40] else goes and invest there.

[00:46:41] Yeah, it is.

[00:46:42] Windsor's cash flowing pretty nicely.

[00:46:43] It's cash flowing nicely.

[00:46:44] They've got a lot of big infrastructure going in there.

[00:46:47] It's a border town.

[00:46:49] They've got-

[00:46:49] South of Detroit.

[00:46:50] Schools.

[00:46:52] Yeah.

[00:46:52] Yeah.

[00:46:52] They've got, they've got no development charges there.

[00:46:56] We're working with some people right now.

[00:46:57] Nick, if you're listening, we're working with some people right now.

[00:47:00] They're doing some really cool things down there, trying to get some cool deals done.

[00:47:03] So-

[00:47:04] Were you just talking to yourself? That, like that Nick? No, there's a, there is more than one things down there, trying to get some cool deals done. So- Were you just talking to yourself?

[00:47:05] That- No, there's more than one nick out there, I think.

[00:47:08] It's an elusive like tight group though.

[00:47:10] You've got a club, yeah. Okay, that all being said and bad jokes over Dan hit me with the

[00:47:17] center of the universe before we get to the last few on the list here.

[00:47:21] Yeah, sure. So Toronto 1.5% vacancy rate and for purpose built rental, condo rent,

[00:47:28] vacancy rate is below 1% and rents grew 8.7% in Toronto.

[00:47:32] There was an increase in rental units in arrears as well from 12.8%,

[00:47:37] which is like, if you think about that,

[00:47:40] 12.8% of markets in Toronto are, that's a lot, dude.

[00:47:45] That's a lot of people.

[00:47:46] That wasn't in 2022.

[00:47:47] It's 19.6 now.

[00:47:48] Right.

[00:47:49] So, inflation and decreasing affordability is what they've credited.

[00:47:56] Classic culprits there.

[00:47:57] Yeah.

[00:47:58] I mean, I get it.

[00:47:59] I don't know.

[00:48:00] I might just stop paying 19.6% of my debt too at this point.

[00:48:03] That'd be nice. Yeah.

[00:48:05] Sorry, Amex if you're listening.

[00:48:09] Despite a 9.1% supply increase, which is, that's also huge, like huge increase in rental

[00:48:14] supply.

[00:48:15] The vacancy rate for condo apartments also decreased from 1.1% to 0.7%.

[00:48:19] So just like, that's just like some of these markets, you're literally reading the math

[00:48:24] and you're like, this math ain't math. And it's like, it's just like, I don't, you're literally reading the math and you're like, this math ain't math.

[00:48:25] It's not math.

[00:48:26] It's just like.

[00:48:27] I don't know if this is girl math or boy math or what kind of math this is, but this is

[00:48:30] not like the traditional math that I learned.

[00:48:33] I don't know.

[00:48:34] Like I was reading some of those girl math examples.

[00:48:36] And if I were to say for those 19.6% of people who are interweres, their rent is basically

[00:48:40] free.

[00:48:41] That's how that works, right?

[00:48:42] I don't know, but I like to say.

[00:48:44] If you buy something with a gift card that you got for a return, it's free. Like same

[00:48:48] thing, right? That's what I think about it. That's how it applies.

[00:48:51] Okay. We continue our journey east to Canada's capital of Ottawa. Despite a surge in rental

[00:48:58] supply and demand, auto's vacancy rate stayed steady at 2.1% for the purpose-built rental market.

[00:49:05] However, the condo market experienced a 0.4 vacancy rate.

[00:49:12] We see the average two-bedroom up by 4% for PBRs at just under $1,700 and the condo apartment

[00:49:20] market at just over, or sorry, I should say just under $2,100.

[00:49:27] And the rental condominium vacancy rate stayed low at 0.4% under 1% since 2019.

[00:49:35] Now to get to where things get interesting here, Dan, not that this all hasn't been interesting.

[00:49:40] I mean, but looking at the rents, it does just like it was wild to think about these

[00:49:43] two markets. So Morayal, the vacancy rate 1.5%, average two bedroom rent was up 7.9%, but still just

[00:49:51] cracking $1,000. Why? And again, we know that CMHC's reports are not exceptionally accurate,

[00:49:57] but still like, even if there's a data point somewhere around that, it's like crazy.

[00:50:01] Even with several hundred dollars off, it's still a hell of a lot cheaper.

[00:50:05] Yeah. I mean, considering like the city when you compare it, apples to apples, it's like

[00:50:09] a Toronto or a Vancouver, right?

[00:50:11] It's a beautiful city with tons to offer.

[00:50:14] Yeah. Lack of units in high inflation led to a 7.9 increase in average rent. Affordable

[00:50:19] units remain scarce with the market. Units having higher rents posing a challenge for

[00:50:23] low income households. The vacancy rate for rental condos fell from 2 to 1.3% due to high demand. So a lot of

[00:50:29] spilling over from purpose built rentals into condo rentals as it would appear. Now in Quebec City,

[00:50:37] purpose built rentals, 0.9% vacancy rate the exact same as the condo apartment market. So less than 1% across the board.

[00:50:47] This is again where things get crazy. The average two bedroom rent, which was up by 4.8% is literally

[00:50:54] $1,040 for purpose built rentals. The average two bedroom rent is just over $1,300. So in 2023,

[00:51:04] a record number of rental units hit the market, yet

[00:51:07] strong demand pushed the vacancy rate to a 15 year low of 0.9%.

[00:51:13] It is wild because Quebec also saw record growth in net migration in 2023 and record

[00:51:18] increase in the CMA's purposeful rental supply between July 2022 and June 2023. So lots going on in some of these

[00:51:26] markets. I think that a lot of people are sleeping on Quebec.

[00:51:30] Time to wake up.

[00:51:30] Time to wake up.

[00:51:32] Time to wake up.

[00:51:33] There you go, Nick alarm clock.

[00:51:35] Quebec is calling.

[00:51:37] Yeah, it's the new ad here.

[00:51:38] Okay, so hit us with the last and final one on the list here. And again, this is we didn't-

[00:51:43] Halifax according to CMHC, the only city in the- The only, the only city and the only city in the East Coast. Yeah, which, uh, which again, we did not,

[00:51:50] we love the East Coast. We did not just report. We were like, yeah, we'll come up with our own

[00:51:54] shots for Moncton and yeah. Yeah, it is. Okay. So Halifax, the last one on the list,

[00:52:01] 1% vacancy rate rents up 11%. Jeez. Again, I apologize on behalf of everyone from Ontario that moved out there to everyone

[00:52:09] listening from Halifax. We're sorry.

[00:52:11] Yeah. Are we though?

[00:52:12] That's tough.

[00:52:13] Because we're Ontarians.

[00:52:14] Well, yeah. I apologize on our behalf.

[00:52:15] Ontarians don't apologize for anything.

[00:52:17] So I'm from Vancouver. I guess a little more sensitive from out there.

[00:52:21] Fair enough.

[00:52:22] I think that's it. That was a marathon. That was a long

[00:52:25] episode. It was a lot of data points, but it was very fascinating, very interesting. I always

[00:52:29] love reading this report. And if you want to learn about how to invest in these kinds of markets,

[00:52:34] make sure that you sign up for our five day challenge. Seriously, do it. That's it. That's

[00:52:39] all we got for you. Just sign up for the five day challenge. It's free. We're running the first

[00:52:42] week of March. I think this episode will be out during that week. So like get in there. It's going to be running

[00:52:47] indefinitely. You can go back and look at the recordings and we want to have you in there.

[00:52:51] We want to teach you how to analyze deals because we are about to enter into a market where we're

[00:52:54] probably in a recession and rents are still rising somehow. That's a pretty good perfect

[00:52:59] storm to be a real estate investor. According to Ben tell we are in a GDP per capita recession currently.

[00:53:06] Yeah. Well, we've been in that since like 2015.

[00:53:09] I was going to say a decade at this point. So anyways, thanks so much for listening.

[00:53:14] Five day challenge. You know what to do. We'll see you on the next one, everybody.

[00:53:17] The Canadian Real Estate Investor podcast is for entertainment purposes only, and it is not

[00:53:23] financial advice. Nick Hill is a mortgage agent

[00:53:26] with Premier Mortgage Centre and a partner in the G&H Mortgage Group, license number 10317,

[00:53:34] agent license M21004037. Daniel Foch is a real estate broker licensed with Rare Real Estate, a member of the Canadian

[00:53:46] Real Estate Association, the Toronto Real Estate Board, and the Ontario Real Estate

[00:53:50] Association.