Projections for the rental market in Ottawa for 2020 were rosy at the beginning of the year as the market anticipated increased rental rates not only here in Ottawa but across Canada. It was projected that rent prices would increase across all big cities including Ottawa. According to Rentals.ca, the average rent in Ottawa was $2,032 at the beginning of the year and had a growth projection of 4% for the entirety of 2020.
However, the COVID-19 pandemic had other ideas and cast a dark cloud over the real estate market as well as the entire economy. As restrictions were put in place to stop the spread of the coronavirus, the economy slumped. The average apartment rent in Ottawa in those early months toward the end of the first quarter and beginning of the second quarter of 2020 fell significantly as the economic downturn took its toll. It mirrored a similar trend nationwide for all types and sizes of rental units. Some cities and neighborhoods even recorded double digit decreases in asking prices as people lost jobs and businesses closed down. Vacancy rates also soared in Ottawa in the same period compared to a 2% recorded towards the end of 2019. People who planned on changing apartments or entering the market shelved their plans awaiting to see how the COVID-19 pandemic and associated economic crises unfolded. Even the tenants who were comfortable with a move hesitated in searching for an apartment due to the fear of the pandemic and didn’t want their current apartment getting opened up for viewing during the pandemic. Visit https://www.surex.com/insurance/tenant/ottawa to learn more of how renters can benefit from having insurance in Ottawa.
Developers and property managers are now being forced to realign to the new reality emerging post-COVID. Affordability across board remains a major challenge. It is compounded by the fact that people were forced to work from home and all indications are that it will become the new reality. Many businesses and institutions will choose to adopt the remote work model moving into the future – no more working in the office. For the rental market, the new reality will feature short-term rental regulations, co-living arrangements, millennials being more likely to live with their parents longer, telecommuting, more people choosing to rent rather than buy, and other aspects of both work and living. People will no longer be attracted to big transportation hubs as they will be working from home moving instead to neighborhoods that have quality schools for their children. Developers will have to work closely with governments and property managers to find solutions that address the new reality as well as soaring demand and prices.
What Is the Average Rent in Ottawa?
According to Rentals.ca, rental rates across Canada for all properties averaged $1,743 for the month of November 2020. It marks a 9.1% annual decrease compared to November 2019 and a 2.2% decrease from October 2020. Compared to November 2019, the rental market has made a drastic turn from extremely hot to extremely cold where fortunes have reversed for landlords/rental property investors.
The figure above represents the average asking rate by landlords for basement apartments, single-family housing, condominium apartments, townhouses, and rental apartments. That figure may hide the real situation in the market. It is not uncommon for landlords to accept rent below their asking price if market conditions are not favorable. Some landlords have offered a month or two of free rent as incentive for tenants to move into their properties. The opposite is also true in a strong market whereby tenants may offer more than the asking price to outbid the competition and get the unit.
Other dynamics that come into play include a unit spending several months in the market since the landlord has failed to lower the asking price or find a tenant that will pay the asking rent. The issue is particularly true for rent-controlled units since it will prove difficult for landlords to raise rents in future if the tenant has a long stay. All these factors may skew average rent in Ottawa and fail to represent the reality.
For comparison, here is a chart that indicates Ottawa average rent prices for November 2020 compared to November 2019 across the different types of rental property.
Average Rental Prices November 2019 and 2020 in Ottawa
|Built Type/Form||Avg. Rental Rate|
|Avg. Rental Rate|
|Basement apartment units||$1,266||$1,493|
|Condominium apartment units||$2,508||$2,038|
|Rental apartment units||$1,520||$1,621|
|Single-family home units||$2,514||$2,038|
Annually, single-family units have recorded a 10% decrease, townhouses have recorded a 3% decrease, and condominium apartments have recorded a 19% drop – the largest of all rental units. Oddly, the average rent for rental apartments in Ottawa has risen 7% year in year perhaps as people settle for this option to support remote work. Most rental apartments are closer to critical infrastructure required by the remote workforce.
The average rent price Ottawa has decreased 9.1 percent which can be explained by prevailing economic conditions, landlords lowering their asking prices, other landlords are incentivizing tenants with one or two months free rent for their more expensive properties. Another factor behind the big decline is the completion of a number of new apartments which has led to the increased supply in the rental market.
The recent announcements about the development of COVID-19 vaccines is good news across the board. As vaccination programs are rolled out moving into 2021, it is hoped that the economy will open up fully and that fortunes will reverse for so many sectors including the real estate and rental markets. Ottawa still remains an economic powerhouse and that will be key in turning the fortunes of the rental market here. As businesses resume and jobs pick up, the economy will become vibrant once more and the rental market will improve to better levels albeit in a new reality.