Ottawa's Rental Market may be Softening Up, What Does This Mean for Investors and Landlords?

Real estate prices in Ottawa seem to be steadily increasing and bidding wars on properties listed for sale are still common in most areas and neighbourhoods of Ottawa.

Although the residential resale market in Ottawa is in a sellers’ market, where buyers are bidding against themselves, to secure their home, the residential rental market in Ottawa on the other hand is showing signs of slowing down.

As a matter of fact, inventory of rental properties available for rent in Ottawa on the MLS has seen an average increase of 36.9% over 2020.

This table shows the inventory of rentals for both 2019 and 2020 by month with the percentage increase.

In December of 2020, we were sitting with roughly 3 months of inventory since then we have seen the inventory drop slightly. 

This means if you were to list a property for rent today at the fair market value it may take you approximately 3 months to find a tenant. These figures are for Ottawa MLS listed rentals. There are in fact way more rentals available on classified websites and through private landlords or large corporations such Minto, CLV, Paramount, District, etc.

This allows tenants in some situations, depending on the location, property type, etc. to negotiate lease terms with their landlords. 

Here’s a graph showing the active rentals listings per month for our City. We’ve gone from 402 active listings in February 2020 (pre-COVID 19 pandemic) to a peak of 681 in December 2020.

This graph shows these same 12 months and the level of inventory. We saw a peak in December with about 3 months of inventory this has since come down slightly at the end of January 2021.

In an area like the downtown core such as Centre Town, Golden Triangle and Sandy Hill the inventory of rentals have increased quite a bit. In February of 2020 before the pandemic, there were 95 active rentals on the MLS within a 3.5 km radius of the downtown core. In January 2021 there are now 292 properties. This represents 46.1% of the Ottawa MLS rental inventory that is currently available at the end of January 2021 compared to only 23.6% in February 2020 (pre COVID 19 pandemic).

This is of course due to the pandemic; less people need to live downtown. Students attending Ottawa U are mostly doing their courses online, the federal government and many companies such as Shopify have their employees working from home. It also means retail store, restaurant and shop owners who have been affected by COVID don’t need to live in the downtown core.

When I think back to 2019 when a tenant was looking to rent a place we would need to make sure the move in of the tenant would coincide with the move out date of the tenant that was leaving. There was a bit of logistical hoops to jump through to make sure the timing worked out.

Nowadays I see many rental properties sitting empty. This makes looking for a rental much easier. The new tenant can move in anytime they want.

At this time 71% of rental properties on the MLS are vacant.

Why do I bring this information up? If you intend to rent a house or condo in the coming months this is something you should keep in mind.

If you bought a new property for you and your family and plan to rent out your current property perhaps the rental prices in your area have changed in the last few months.

If you bought a home or condo from a builder and you were expecting $2,000 a month perhaps the current market can only support a rent of $1,800 with an increase in the days your property may spend on the market.

Here’s a table showing the median rent per month from 2019. Except for February 2020, for each month of 2020 we see the median rate is lower than in 2019.

For each month median rates are actually lower than in 2018 except for September.

Once again I want to remind you that these states and the data I am showing you are for rentals on the MLS, listed with a Realtor. Like I said before, there are more rentals out there available for rent.

Once again if you bought a property from a builder and are taking possession in a few weeks or months and the intent was to rent out the unit. Perhaps you may want to reevaluate the rental market in your area. As a Realtor I can certainly help with renting out the unit. If your rents are not where you expected them to be and are considering selling and cashing in on the profits made from the time you’ve bought to today we should also talk.

In the coming weeks and months more and more people will be taking possession of their new units and if the Canadian borders remain close to immigration the perhaps the only thing we can rely on is migration within the country. I’ve touched on this topic in my Ottawa Real Estate Trends & 2021 Market Outlook video so you may want to have a listen.