Increase in Rental Vacancies Could Have Significant Impact on Housing Prices

According to economists at Capital Economics, the recent increase in vacancy rates for short-term rentals could have a significant impact on housing prices in the near term.

The lockdown measures and travel restrictions have caused immigration to drop to near zero, as well as increase the the unemployment rate among the bottom quartile incomes. As a result, the demand for short-term rentals in many heavily-populated areas such as Vancouver and Montreal has fallen significantly, causing the rental price to follow suit.

Even in the event that economic lockdowns and travel restrictions are lifted within the next short while, causing vacancy rates to taper off, the rental price decline could still very well be anywhere between 5% to 10%. Such a dramatic drop in rental prices could be disastrous for housing prices. In Toronto alone, if the vacancy rate increases from 1.5% to 4.5%, then that easily translates to a 15% drop in rent prices.

Many landlords have already been struggling with covering their costs from lack of incoming rent payments, which could mean they may look at selling their property as a means of alleviating the financial strain. In the event that a house-selling cascade is triggered, housing prices could fall by more than the anticipated 5%.

Information for this briefing was found via Bloomberg and CBC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Leave a Reply

Video Articles

We’re At The Start of a Great Silver Boom | Ross McElroy & Andy Bowering – Apollo Silver Corp

Equinox Gold Q1 Earnings: When Everything Goes Wrong

SSR Mining Q1 Earnings: Costs Continue To Climb

Recommended

First Majestic Makes Second Major Discovery At Santa Elena In Just A Year

PTX Metals Hits 235.1 Metres Of Copper, Nickel Mineralization In Longest Intercept To Date At W2

Related News

Canadian Homeowners May Be Facing Downsizing Pressure Amid Housing Affordability Crisis

A recent Wahi survey reveals a concerning trend in the Canadian housing market, with downsizing...

Monday, June 24, 2024, 01:50:00 PM

Canadian Business Sentiment Slumps to Lowest Since 2020 As Price Pressures Bite

Both consumers and businesses are feeling the pressure of persistently high inflation, causing a sharp...

Sunday, October 23, 2022, 01:08:00 PM

Canada’s NATO Defense Spending to Fall Shorter Than the Government Projects, Watchdog Reports

Canada’s Parliamentary Budget Officer (PBO) Yves Giroux has bad news for Canada’s North Atlantic Treaty...

Tuesday, July 9, 2024, 07:10:00 AM

US Existing Home Sales Unexpectedly Fall for Third Straight Month

Sales of existing homes fell for the third consecutive month in April, as low inventories...

Sunday, May 23, 2021, 05:03:00 PM

Federal Government’s CERB Payments Have Led Increased Consumer Spending

It appears that the Canadian federal government’s stimulus spending has persevered the economy through the...

Friday, June 26, 2020, 05:03:00 PM