IS THE PARTY OVER?
after the Real Estate feeding frenzy, we are starting to see rental rates drop.
2015-2016 were boom years for the furnished rental industry. Whether short term vacation properties or mid to long term executive properties, demand exceeded supply. This allowed rental rates to climb for 1, 2 and 3 bedroom units to the level of actual profit for most homeowners. Those were the days. Those years were the beginning of hyperactive Reals Estate sales which continued up until the fall of 2018 and winter of 2019. Is the party over?
The recent boom years were the result of many factors including the exodus from other provinces of retired baby boomers. They started coming out in 2015 to permanently relocate here. They would rent furnished properties for a couple of months while they looked around for something to buy and buy they did. Properties once in the rental pool were now snatched up never to return as the new owners were living in them creating a shortage of rental housing. Others who would have invested in Vancouver found better deals and values here so they bought up substantial properties too.
Businesses and contractors were also bringing in employees who needed furnished housing and times were very good.
Enter the Government to throw a wet blanket on everything with their new licensing and taxation rules in particular with ownership of a second home or investment property.
The spec tax for a second home in Victoria and the new licensing fees and requirements for the vacation rentals have subsequently created an oversupply of furnished housing as everyone with a second home or vacation home is rushing into the executive rental sector. Not all will survive as we are now seeing downward rental rates due to oversupply and lower demand.