Windsor rental unit availability hits record low, prices up, new report shows

The availability of rental units in Windsor, Ont.,has hit a record low as prices continue to go up, according to a new report.

Numbers released this week show Windsor's rental vacancy rate dipped to a record low of 1.8 per cent as of October 2022. The cost for an average two-bedroom rental unit also rose to nearly $1,200, up 3.9 per cent compared with 2021.

The Rental Market Report released on Thursdayuses data from the Canada Mortgage and Housing Corporation (CMHC).

By comparison, the rental vacancy rate was nearly 15 per cent more than a decade ago.

Paul Germanesehas been a realtor in Windsor for 17 years. Many years ago, he recalls a time when he would ask clients "why rent when you can own" because the average sale price was $140,000.

Now, with the average house price in Windsor last month sitting at $473,642 and higher interest rates, home ownership isn't attainable for many. Germanese said that means renters are staying put and for longer periods of time.

"They know if they leave their rents are going to go up 50, sometimes 100 per cent. That's why we're seeing a huge, huge demand put on the rental market as well," said Germanese.

Another area of concern highlighted in the report is related to affordability.Rent prices for new tenants are 20 per cent higher than units already occupied.

TadiwanasheMangwengwende, a senior analyst for market insights for the CMHC, said there's an increase in demand for rental units, but supply has become a big issue as well.

"The higher cost of homeownership meant that units that would have been made available ... weren't added because some [renters] decided to stay put. Those elements then really compounded the limitation on the supply end, while the demand side continued to grow as the economy began to recover following the easing of pandemic restrictions," saidMangwengwende.

Last year also marked the first timeMangwengwende began getting an increasing number of reports of rental bidding wars. Historically, that type of behaviour was reserved for larger cities such as Toronto and Vancouver, he added.

"It's a reflection of not only how tight the market is, but how squeezed, particularly low-income households would be if they are trying to enter the market or move."

He points to major projects such as the electric vehicle battery plant, scheduled to be operational next year, as signs of an upward trajectory that will require more housing.

Ultimately, the biggest solution to address some of these challenges comes down to increasing housing supply, he said.

Right now, Germanese said many property owners tend to go with a variable mortgage. So, a rise in interest rates means they pass on that increase to tenants, increasing rates, he said.

However, Germanese said there's light at the end of the tunnel. Themarket indicates mortgage rates are starting to stabilize, he said, which means the rental market will follow suit.

"Rental prices will drop when interest rates drop because the home ownership market will become larger andthe rental pool will become smaller. Right now now the rental pool is massive because people can't afford the interest rates," said Germanese.