Does more rentals lead to less ownership?

The other day I was listening to a BC developer talk about the cost of developing housing and how more rental property housing has been built over the past few years. In fact rental housing starts outpaced new home starts in BC.  The developer said this will lead to less home ownership. This will be true in the short term though it will change in the long term.

More purpose built rental housing has been needed in BC and particularly in the lower mainland for many years. How is this going to make more people home owners?

For many years the market has used individual landlords as the majority of rental properties in BC. These properties are condo’s purchased for the intent of renting them. With the slow down in the rental market many of these landlords will not be able to sustain long term vacancies and will eventually put the properties up for sale. The increase in sales supply will eventually push down the prices and that will increase the number of people purchasing properties. The renters will still be there, they will just move into the purpose built rental properties. We are seeing rental units vacant for multiple months and rental buildings will also eventually decrease the rental prices they are already offering incentives to move into their building that small landlords can’t provide. 

There will still be a need for small landlords to fill the needs of the rental market. They have always existed and will always be needed. For too many years the small landlord has been the majority of the rental market growth. The problem with using this market is that it is volatile when the owners decide to leave the market. Purpose built rental properties stabalize the rental and housing market as these products never leave the rental market. 

What would be a better process is if the market builds purpose built properties annually alongside of the market condos rental investors purchase. This would reduce the possibilty of the rental market fluctuating too much in either direction. 

Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com