Why Demand for Single Family Rentals is Rising

Over the past decade, rentals for single family homes have delivered exceptional returns for residential real estate investors through appreciation and rental income.

While there are plenty of reasons why, single-family rentals tend to attract renters because they are generally larger than multi-family units, located in more suburban areas, have access to outdoor space and offer the chance for a family to grow.

This has been particularly true during the pandemic as more and more renters have fled the city for larger homes and more outdoor space as some were able to make the shift to working from home. 

On top of this, demand for single family rentals was already on the rise before the pandemic because younger generations are having more of a challenge affording a house or condo. This has been compounded by student debt, a tight job market and the inability to save for a down payment in the face of skyrocketing housing prices.

While at first glance this might seem problematic, many millennials still make enough money to rent larger single-family homes and are even willing to pay a bit more in order to live in one.  

In fact, according to REMAX, younger Canadians under the age of 35 are significantly more likely to realize that they need more space and are motivated to move out of their current neighbourhood than older Canadians.

Given this increase in demand, it’s no surprise that the average rental price for single family properties is also on the rise.

According to a recent report, rent for single-family properties increased by 4.9 percent month-over-month from $2,385 to $2,502 in April. Single family homes also experienced an annual increase in average rent between April 2020 and April 2021, rising 1.5 percent from $2,466 up to $2,502.

This is in contrast to the rest of the rental market where the average rental price declined by one per cent month-over-month to $1,675 in April and saw an annual decline of 9 per cent. The median rental rate for all properties was $1,600 per month in April, a 13 per cent decrease from a year earlier, and a monthly decline of 2 per cent.

While the short-term economic factors for investing in a single-family rental remains strong, many new and seasoned real estate investors are also investing in single family properties because of the long-term financial gain.

According to the Canadian Real Estate Association, the average price for a single-family home across Canada increased by 28.4 percent on average compared to last year.

While this is higher than normal, over the last 10 years single-family homes have increase in value by 106.6 per cent, essentially doubling in price and making it a wise investment for anyone who wants to double their money over a 10-year period.

Given the economic factors at play and the rise in demand for single-family rentals, many economists predict this trend will continue well into the future, which bodes well for new and seasoned residential real estate investors.

Want to learn more? Reach out to us with any real estate investment questions and to learn more about real estate investing opportunities in Durham.

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