Growth Green Road Sign with Dramatic Clouds and Sky.
Every good business begins with knowing your customer. As Rental Housing Providers and Real Estate Investors, our customers are our tenants. Ideally we would like to know as much about these tenants as possible. We like to get specific: provincial information, city demographics, neighbourhood preferences, and sometimes even the profile of specific buildings or streets. Today however, we’re taking a high-level overview of the tenant profile.
Back in the day … being a tenant was often a temporary situation in Canada. Young people actually moved out of their parents’ houses before the age of 30, and rented while they saved and until they bought a house or dwelling of some sort. Currently, in cities all across North America, people of all ages are choosing to rent, or are forced to rent indefinitely. There are frequent articles being written about Renting as a “new norm”, and even entire books being written about the status of Renters, “The Wealthy Renter, How to Choose Housing that will Make you Rich.” More research has been done in the USA, so we’ll use those numbers for today: in 2006, rented households totaled 31% of all households. In 2016, that was up to 36.6%. Predictions are that the majority of households will be renters by 2030! (that simply refers to greater than 50%).
What do I hear? More and more customers for my rental properties, driving demand for rentals up, and increasing rental prices—which means better cashflow over the long-term and a strong business model with a steady supply of customers.
Why are people renting? One main reason in Canada is the large influx of immigrants: over 1 million expected in the next 3 years alone. All of these newcomers need time to establish credit history, job security, and savings which are all required for bank approval. In some communities, affordability has risen dramatically (Toronto and Vancouver house prices, need I say more?). And currently our lending institutions have tightened their criteria for mortgage qualifications. When interest rates rise, even fewer people will be able to qualify to purchase a home.
There are countless other reasons that help to explain the rising trend to rent housing rather than purchase, or at least delaying that purchase. We love having an abundance of customers, now and trending into the foreseeable future.
