There’s no denying that rents on the Ottawa Real Estate Board are (still) on the rise. 

In fact, according to Zumper data, the average rent in Ottawa is currently $1,699, a 14% increase from one year ago.

Many people are finding themselves being pushed out of the rental market because they simply can’t afford the new, high prices.

Underlying Issues

Inflation has been creating affordability issues for a couple of years now. In 2021, the annual inflation rate in Canada was 3.4%.

It is clear from the rising cost of food and gas that the trend has continued into 2022.

Living costs are going up a lot faster than wages, and lower-income families are struggling to afford the essentials while others are having to cut back on things like travel, recreational expenses, and holiday spending.

Thus, inflation has certainly played a part in making rentals in Ottawa, and most Canadian markets, less affordable.

But there is another factor that is driving up rental rates.

High Demand

The Bank of Canada has issued several interest rate hikes this year, and continues to do so in an effort to slow inflation. This has been a major factor in the recent decrease of home sales on the Ottawa Real Estate Market. Some potential buyers have simply been taking a step back to wait and see what happens, but others have found that they no longer qualify for mortgages.

That could mean more people looking to rent. And there are already lots of people seeking affordable rentals: in Ontario, there are tens of thousands of people on the waitlist for rent-geared-to-income housing.

Add to that the problem of real estate investors.

Real estate investing has become a really popular choice for individuals and families who can afford to purchase a second property. For those looking to supplement their income, renting a home or condo is an easy way to do that. It’s far easier than starting a side business or taking on a second job because it is a passive income. And, since real estate never loses its value, investment properties provide a good ROI.

However, these investors have driven up demand for housing.

Currently, people who own more than one property make up one third of the stock in many of Canada’s biggest housing markets (they accounted for 31% of properties in Ontario as of 2020). Governments have begun to take action against professional investors and foregin owners, but many of these properties are possessed by Canadian residents. Preliminary research also shows that many of the properties sold over the last two years were purchased by investors who were hoping that the market changes would bring them even better income opportunities.

Real estate investors need to ensure that the money they make will cover the expenses they put into the property, such as mortgage payments, insurance, taxes, and repair costs. As the cost of living goes up, so too could these rental prices.

Finding Relief

Coming up with a solution certainly won’t be straightforward. There are lots of moving parts to consider. And, unless rental rates drop or wages increase, many renters may still have a hard time finding a place where they can afford to live in and around Ottawa.

There isn’t much that Realtors® can do to change the current market, but we can help you navigate it. A Realtor® can help you narrow down rental listings that fit your budget and criteria to help you see what is available and can advise you on ways to find the best property to suit your needs.

Need help finding a rental in the Ottawa area? Give us a call: 343-429-5175.