When Christine Grice, a single mother, began searching apartments for rent in Dundas, a community in Hamilton, Ontario, in June, she said she was surprised by what she was seeing.

It’s not just that a two-bedroom apartment now costs $ 1,795 in the same building where Grice was renting a three-bedroom apartment for $ 1,650 just three years ago.

It’s just that rents seem to be going up while Grice is searching.

“Her website says $ 1,399 (per month) but … when you get there it’s $ 1,499,” she says.

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Grice says she has noticed rapid rent increases for both large, professionally managed properties and advertised basement apartments in Kijiji.

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And available units are running out at record speed, she says.

“You have to be quick,” she says, recalling that an apartment advertised for rent on a Friday already had applications the next day.

“I think it’s ridiculous that I can’t afford to live in the city I grew up in,” she says.

Rent bidding wars and ruthless competition were common in expensive markets like Toronto and Vancouver before the pandemic. But as government-imposed restrictions increase and activity revives in both the rental and property markets, part of that frenzy in big cities is reaching smaller nearby cities.

Hamilton has seen a 37% year-over-year increase in rental transactions in June, says Mustafa Abbasi, president and chief revenue officer for the online real estate market Zolo.ca, citing data from the Hamilton and Burlington Real Estate Association.

At the same time, the median rent has increased 9% in July, from $ 2,200 to $ 2,400.

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The numbers indicate a “substantial increase” in rental demand in the area, he says.

A similar phenomenon appears to be at play in Abbotsford, BC, an hour’s drive east of Vancouver, Abbas notes.

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There, rents rose 15.8 percent in June compared to the same period last year, one of the largest increases in Canada, according to Abbas.

Those trends are in stark contrast to what’s happening in Toronto and Vancouver, where the pandemic is pushing down rents.

The median rent for a vacant one-bedroom unit in Toronto is down more than 9% compared to the previous year, while two-bedroom apartments are now 4.4% cheaper, according to a analysis through the rental listings site Rentals.ca.

In Vancouver, the median rent for a room remained largely flat, while the median vacancy for two rooms is now 6.7% cheaper.

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Money 123: renting vs. owning

What is increasing rents in smaller cities?

Part of what drives new tenants to smaller cities may simply be affordable. In a June survey of more than 16,000 tenants in Canada, Rentals.ca showed that half said they would have to look for more affordable rentals due to the pandemic.

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The COVID-19 recession has disproportionately affected low-wage workers, labor market data shows. And low-income families are more likely to be tenants.

But what fuels the demand for rentals in communities like Hamilton and Abbotsford probably goes beyond financial need.

Much of this is likely also to do with the shift to working from home, Abbas says.

“Consumers are also looking at their workspace: Do they have enough space to work from home permanently?”

Workers who have limited themselves to writing from the couch in their singles department are craving more space. Parents who have been sharing the kitchen table with their children long for a home office.

At the same time, as employers get used to employees working remotely, big city dwellers probably feel like they can move further from the office, Abbas says.

And while many tenants are likely to be looking for larger units, potential home buyers are also increasing pressure on small-town property markets, he adds.

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In Hamilton, Royal LePage agent Joe Ferrante says he is observing that trend first hand.

Toronto homeowners are selling in the city with the intention of buying in Hamilton, but once they get there they end up renting because they can’t find what they want from a limited inventory of properties for sale.

In both big and small cities, real estate agents have been reporting a reduction in inventories of homes for sale, as buyers rushed to buy properties to take advantage of low interest rates and expired on the start date of 1 July marking the introduction of stricter standards for home buyers to qualify. for Canada Mortgage and Housing Corp. (CMHC) mortgage default insurance.

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In Hamilton, many potential buyers “are forced to rent because there is no product,” says Ferrante.

The trend of increasing rental demand in the smaller towns surrounding big cities is not universal, says Abbas.

In Montreal, for example, tenants and home buyers seem to continue to gravitate toward the city, probably because it’s still more affordable than Vancouver and Toronto, he says.

But demand for rentals in small towns seems widespread.

“Tenants now prioritize affordability and space rather than paying more for big-city amenities, most of which they can’t currently use,” says the Canadian Rental Report for July of PadMapper, which adds online rental listings.

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Rentals in Barrie, Ontario. and Burnaby, BC are up 7.6 percent from this time last year, the report said.

And Rentals.ca says it saw unique pageviews for several southern Ontario communities that skyrocketed between March and June this year. Innisfil, one hour and forty minutes north of Toronto, experienced a 124% increase in user interest. And Newmarket, London, St. Catharines and Niagara Falls are up more than 70 percent.

As Toronto residents come to Hamilton, Hamilton residents move to St. Catharines and Niagara Falls, says Ferrante..

For his part, Grice still hopes to find an apartment in Hamilton that he can afford with his $ 60,000 salary.

She wants to find a place where her 13-year-old twin daughters can visit their friends without getting in the car, she says.

“I am looking for anything I can afford.”

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