Rental properties vacated by students who have returned to their home town or native country; property owners who, faced with a shortage of international tourists this summer, put short-term vacation rental suites on the long-term market. These are some of the factors that housing advocates and real estate watchers say could reduce rental prices in Greater Victoria.
A rental service says prices have already dipped, but a spokesman for a landlords’ group says he hasn’t seen much of a drop yet.
Monthly rent for a two-bedroom unit in Victoria dropped to $1,800 in April, down 10% compared with March, according to a report by national rental listing website Rentals.ca. A one-bedroom apartment, which rents for an average of $1,500 a month, saw just a 3% drop in April over March.
Prices dropped more in Vancouver, according to the report, with a 15% drop for a two-bedroom unit.
Douglas King, executive director of Victoria-based tenant advocacy group Together Against Poverty Society, said any ease in rental prices will come as a huge relief to tenants, many of them struggling with job losses due to the COVID-19 pandemic.
“I think it confirms what we were hoping to see which is that the lack of competition from some areas of the market have led to price decreases in the rental market, both in Victoria and Vancouver,” King said. “It’s been pretty badly needed for the local population.”
However, he said rents are so high that even a 10% or 15% dip feels like “a drop in the bucket.”
Rents have been bolstered by a vacancy rate, measured by Canada Mortgage and Housing Corp., that has been about 1% for years.
David Hutniak, CEO of Landlord B.C. which represents 3,300 residential landlords with about 125,000 units in B.C., said vacancies are slightly higher than usual, partly because many post-secondary students ended their tenancies in April after classes went online.
“We saw some turnover from the student population and because of the inability to show units and all the necessary safety precautions, there’s a bit of a lag in being able to fill these units.”
However, Hutniak has not seen much evidence that rents are dropping substantially.
Hutniak said while COVID-19 has had an impact on landlords in terms of unpaid rent, the problem is not as widespread as some expected.
Property owners fear more people will have trouble paying rent once emergency government assistance programs end and with the province facing an 11.5% unemployment rate, Hutniak said.
The B.C. government is providing a rent subsidy of $300 to $500 for three months to low- and middle-income earners who lost their income due to COVID-19 and imposed a moratorium on evictions during the provincial state of emergency.
King remains concerned about people who might be behind on their rent and are fearing eviction once the moratorium is lifted.
“How are we going to manage people who are behind on their rent because they lost their income? We’re worried we’re going to see a lot of evictions.”
Tsur Somerville, a professor at the University of B.C’s Sauder of School of Business and an expert on B.C.’s housing market, said while it’s too early to forecast the long-term impact on rental prices, economic factors should push prices down.
“Because you’ve got the economic uncertainty and likely recession which would reduce demand for real estate in general,” he said.
Somerville said he’s interested to see how owners of short-term vacation rentals will respond to the lack of tourists. Some might list their units as long-term rentals, some might sell the units, while others might just hang on and eat the loss.
Debra Sheets, a member of the Greater Victoria Short Term Rental Alliance, said she doesn’t see many short-term rental owners offering their units for long-term lease.
“I will never go to a long-term rental, you face so much long-term risk,” said Sheets, who uses Airbnb to rent out her micro-loft in the Janion building overlooking the Johnson Street Bridge. “You cannot evict someone if they’re not paying rent.”
Sheets said she’s currently renting the micro-loft for $75 a night, half the typical rate.
Property owners struggling to cover a mortgage without tourist dollars are more likely to put a unit up for sale, she said.
She has seen six units in the Janion, which is zoned for short-term rentals, listed for sale.
Sheets said the lack of tourists is just one more challenge faced by short-term rental owners, who are already hit with the speculation tax, commercial taxes similar to hotels and a $1,500 City of Victoria business licence fee.
“I think short-term rentals provide crucial income to families,” she said.
She knows of one property owner with a suite who uses profits earned during the high season to offer below-market rent to students from September to April.
Sheets is also concerned that municipalities could follow the Town of Sidney’s steps to ban short-term rentals.
Sidney had limited vacation rentals by requiring property owners to occupy their home while renting out rooms. A motion passed unanimously on May 11 directs staff to draft a bylaw by Aug. 31 that would ban all short-term rentals.
“We hope this also sends a message of support to our local hotel, motel and inn operators who we all know are hugely impacted by the pandemic and will have a long recovery,” Sidney Mayor Cliff McNeil-Smith said in an email.