Rising Vacancy and Moderating Rent in Canada's Housing Market
Vacancy Rates on the Rise in Canadian Rental Market
Economic changes impact demand for rental properties
Yardi Canada has released its latest analysis revealing significant changes in Canada's rental landscape. This report emphasizes a marked increase in vacancy rates and a noticeable moderation in rent growth across the country. This shift reflects ongoing trends including slower immigration and economic uncertainty, which are undoubtedly influencing rental demand.
Overview of Current Vacancy Trends
The national vacancy rate now stands at 4.1%, reaching its highest level since 2020. Key urban areas such as Calgary (7.4%), Toronto (4.2%), and Edmonton (4.6%) are experiencing the most notable increases in vacancies. The rise in vacancy rates is attributed to several factors, such as a reduction in immigration and an increase in housing supply.
Rental Growth Dynamics
Despite the decline in rental demand, the in-place rents have shown a slight increase, rising by $14 nationally to $1,720 in the second quarter of 2025. Year-over-year, this growth slowed to 4.8%, a drop from 6.3% observed in the previous quarter, indicating a shift in market conditions.
New Metrics Introduced by Yardi
This quarter, Yardi has introduced a new metric called Average Resident Length of Stay, highlighting the average months tenants occupy a unit before leaving. In regions with limited housing supply, such as Toronto (47 months) and Hamilton (45 months), tenants tend to stay longer, contributing to the stability of those markets.
Implications of Changing Market Conditions
Interestingly, lease-over-lease rent growth—an important index for newly signed leases—has diminished to 2.8%, marking the lowest rate recorded by Yardi since tracking began in 2020. This decline indicates a shift in the leasing dynamics as landlords and tenants adjust to current economic realities.
Peter Altobelli, vice president and general manager of Yardi Canada, has noted, "Vacancy is rising, and the market is entering a new chapter. With shifting demographics, economic uncertainty, and growing supply, housing providers must rethink how they forecast, invest and operate. The path forward demands sharper insight, faster adaptation and a renewed focus on long-term resilience." His insights underscore the need for landlords to adapt to the evolving rental environment.
Adjustments by Landlords
As vacancies rise, many landlords are responding by offering rent concessions to attract and retain tenants. These concessions can include offering free rent periods or incentives for move-ins, strategies aimed at maintaining occupancy levels amidst increased competition in the rental market.
The national turnover rate remains relatively low at 23.4%, despite seeing slight increases in certain areas. This stability in tenant retention could help mitigate the effects of rising vacancy rates on property owners.
Conclusion
In conclusion, the Canadian rental market is encountering a transitional phase marked by rising vacancies and moderating rent growth. Housing providers face significant challenges as they adjust to new population trends and an evolving economic environment.
Frequently Asked Questions
What is the current national vacancy rate in Canada?
The national vacancy rate has climbed to 4.1%, the highest since 2020.
How much did in-place rents increase recently?
In-place rents increased by $14 nationally to $1,720.
What is the Average Resident Length of Stay?
The Average Resident Length of Stay measures how long tenants typically occupy a unit, with longer tenancies reported in areas with limited supply.
What trends are impacting the rental market?
Slower population growth, reduced immigration, and rising housing supply are impacting demand and vacancy rates.
How are landlords responding to rising vacancies?
Landlords are increasingly offering rent concessions and incentives to retain tenants and maintain occupancy.
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