Terrie’s Predictions for the Rental Market 2023

Hold onto your hats. It’s going to be a long, cold winter for a lot of renters. In our office, we have a higher volume of payment defaults than ever before–and it’s mid-December! Usually, January and February are the months when most of our tenants have payment issues. They load their credit cards during the holidays and then have a hard time making rent early in the year. If we’re seeing defaults BEFORE the holidays, my bet is that the rising cost of living is hurting a lot of people’s pockets.

My advice: prepare to negotiate payment plans with your vulnerable tenants or else prepare for a hairy season at the rental board. Rents are marching upwards and vacancy rates remain low in many markets, so I don’t expect that renting units will be very difficult. It will be more a question of managing turn-over, or picking and choosing which tenants you want to help through a rough patch.

Terrie’s Predictions for the Market in 2023

Rate increases will slow, prices will come down some, and professional investors will start getting antsy in Spring. Jammed up markets will start moving.

Is it time to buy?

Prices of investment properties will come down a bit, but the interest rates will continue to be a problem for profitability for a while longer. I wouldn’t worry too much about long-term profitability of rental housing, though. Here’s why. Housing affordability is decreasing across North America. Interest rate rises have priced some buyers out of the market. Even with prices adjusting downwards, higher payments have actually made it HARDER for first-time buyers to get onto the first rung of the property ladder. This will put increasing pressure on already tight rental markets.

My advice – raise capital or liquidate.

Don’t worry about taking a small price hit if you’re selling. Fill your coffers – deal season is coming! And rising rents will offset this year’s rate hikes.