How the pandemic will reshape the residential rental market
Reposted from REMonline.com: By Paul Danison
How long has it been since we began hearing these words every day: COVID-19, coronavirus, pandemic? How long before we try to forget them? Who knows – it could be awhile. But the new words will probably change us – change the way we live, play and work, and will possibly bring a more massive digital transformation closer to home sooner than predicted. Take housing, renting, and all that’s associated with the search, the transactions and the move. Post-COVID-19 could bring about some changes to enhance the process, making it more efficient, easier and maybe even more enjoyable.
People are searching for rentals again, says Matt Danison, CEO of Rentals.ca. “Rentals.ca has
experienced its all-time high in traffic numbers in the first week of May, surging 59 per cent compared to the first week of April,” he says. “Renters who put off moving when the pandemic hit are now starting to resume their apartment search in the hopes that Canada’s lockdown will end in the coming weeks.”
Guy Tsror, data scientist at Local Logic in Montreal, agrees. “At its worst point since COVID-19, the rental market lost 27 per cent of user search traffic across Canada,” he says. “But since that low point in mid-March, the market has rebounded with the search traffic for the last two weeks of April exceeding the last two weeks of January. “People still need homes, and we see that the initial shock of COVID-19 has subsided, and consumers are back out there looking for homes online.” Local Logic looked at how users interact with its proprietary Location Scores to understand what matters to renters now, compared to pre-pandemic days. Unsurprisingly, people in Canada looking to rent care about proximity to grocery stores much more than before the outbreak – 13.5 per cent increase compared to January averages. What renters cared about in April versus January of this year. (Local Logic).The graphic shows renters care much less about public transit (a 14-per-cent drop), and they are much more interested now in cycling (a 17.3-per-cent increase). “Since COVID-19, renters’ lifestyle demands have changed and have not rebounded to pre-COVID times; we see renters are looking to live in more cycling- and pedestrian-friendly areas, with better access to groceries and better access to schools,” says Vincent-Charles Hodder, CEO of Local Logic. “Conversely, renters care less about being close to quality retail shopping, public transit, daycare and quiet neighbourhoods. “Only time will tell if this is a permanent change in lifestyle demand or if this will begin returning to normal as non-essential businesses reopen and consumer confidence returns.” Rentals.ca put together seven predictions – digital and otherwise – that might stick long after the coronavirus is gone to reshape the housing/rental market.
1) More landlords and renters will embrace online virtual leasing, 3-D and virtual tours. It’s not like 3-D and virtual tours are something new; they just have not been commonly used. More tenants will begin paying rent digitally than ever before. 2) Some short-term rentals in urban areas will convert to long-term rentals. The longer short-term rentals in the larger cities remain vacant, the sooner their owners could put them back into long-term rental stock. Or, they might have to put the units on the market if they can’t afford the mortgages. This could give renters more options, help open up supply a little in cities such as Toronto, Vancouver and Halifax with tight vacancy rates, and might even help to lower rents. But the biggest short-term problem for short-term rentals are new laws prohibiting them in some jurisdictions. 3) Cleaning will take on a whole new meaning in apartment buildings. Cleaning will become a bigger industry with stricter rules or guidelines on how to clean, what to use and how to stay safe while cleaning. Janitors and cleaners already wear gloves, but now they will probably don masks, coveralls that are washed every night and use spray bottles of disinfectants known to kill the coronavirus. The rags, brushes and equipment used to clean will need to be cleaned and disinfected or trashed. Cleaners might be trained better for the coronavirus, and they could get a temperature check before coming to work each day. This will become a more expensive task for landlords and property managers. 4) More claims will flood tenant/landlord boards. The renting landscape in the shadow of COVID-19 is confusing and chaotic and things could get worse unless cooler heads prevail. Rent strikes were planned for April and May, evictions are banned, rent hikes are frozen, job losses are mounting, government assistance is on the way – soon they say. Once the coronavirus war ends, the landlord/tenant war could escalate and play out in tenant/landlord board hearings and maybe even in more litigation. Tenant/landlord tribunals are already overloaded and backlogged; this could get worse post-COVID-19. 5) People will not move as much in the short term but expect a spike in the recovery. When the worst is over, moving vans will start rolling again as optimism gets us moving again. Most moves will only be delayed during this bleak time. While more renters will be on the move, count on fewer homeowners making a move. 6) Rents could fall in the short term, and affordable housing will be even harder to find. Imagine if you can, Toronto and Vancouver with a healthy three per cent vacancy rate, and rents falling by the end of the year rather than rising. A few months ago that would have been laughable. But because of COVID-19, Canada will have less immigration, fewer international students and with the border closed, not nearly as many seasonal and part-time workers. All typically are renters. And, because of No. 2 above, some-short rentals will be converted to add to the rental supply. So, with fewer renters and more supply, rents could slide down overall this year, but the higher end of the rental market advertised as luxury rentals could be more affected. “With the record number of layoffs, there will be more demand than ever for affordable housing,” says Danison. Also, in some areas, building affordable housing has slowed or even been halted for a while. 7) Coworking spaces in apartment complexes could become the hottest new amenity. Working remotely is not new. Many in the gig economy know nothing of office politics. And, coworking spaces were becoming popular in new apartment complexes before COVID-19 hit. A few other trends to consider post-COVID-19:
The dream of buying becomes more of a dream. The nightmare of COVID-19 could extend the trend of renters staying renters longer.
With vastly increased food delivery, will apartments have a designated area for the exchange of food and goods between delivery services and tenants? Not a bad idea.
Will international students be caught in a pickle of looming deadlines to leave their residences and the dwindling number of international flights? What will they do, caught in between school and going home?
One last point: Character, creativity and community are often developed out of adversity. Think back to the 2008 “Great” recession or even to 1929 Great Depression. Entrepreneurs and creative companies will come together with innovative solutions to the housing crisis stemming from the 2020 COVID-19 pandemic. Count on it.