Due to a lack of profitability, many owners have decided to sell the condos they rent, contributing to the record decline in the number of rental units on the market at the end of 2023.
This has been determined by the Corporation of Real Estate Owners of Quebec (CORPIQ). According to the company, hundreds of tenants received foreclosure notices last December.
“We have never seen so many people wanting to sell their rental properties, it is a real epidemic and unfortunately even an improvement in the mortgage rate situation will struggle to address the chronic lack of profitability as the equation has now become intractable. “,” explained CORPIQ’s general director, Benoit Ste-Marie, in a press release on Monday.
The situation can also be observed in small complexes, i.e. buildings with one to four rental units, according to CORPIQ. The high interest rates are largely responsible for this decline.
“Nearly 100% of sales transactions result in recovery as the rental industry is now no longer profitable,” the company said.
The rental housing market was already struggling before the rate hike due to costs associated with insurance and condo fees.
“Even before the interest rate increase, many rental properties were in loss; “With the rise in interest rates, rental property owners no longer have any choice but to sell as losses easily reach $400 to $500 per month, which is an untenable situation after some time,” Benoit Ste added.
This unprofitability of the rental sector is likely to lead to an ever-increasing decline in 2024, the director general fears, which will further fuel the housing crisis.
In Quebec, 85,000 of the 400,000 condos listed are rented. According to CORPIQ, 20% of condominiums are expected to exit the rental market over the next five years, representing a withdrawal of 17,000 units.