Skip to content

Reduced demand for small units could be driving rents down

'I think we’re starting to see some numbers going in the right direction. We’ve had a rip-roaring start to 2022 (for housing starts). Finally, the supply is growing,' says Barrie mayor

Some of the same forces that are helping to drive down house prices may also be pushing the city’s already high rental prices up even further.

But Barrie is seeing an odd phenomenon as a persistent demand in larger units  observed by online rent aggregators  appears to be pushing down prices for smaller rental units.

At the same time, the brisk pace of home building in Barrie, on track to become a record year, is providing hope of relief of high prices for accommodation.

“I think we’re starting to see some numbers going in the right direction,” Barrie Mayor Jeff Lehman told BarrieToday. “We’ve had a rip-roaring start to 2022 (for housing starts). Finally, the supply is growing.

“I’m almost 100 per cent certain that this will be the biggest year for apartment construction in Barrie," he added. 

Lehman is encouraged that this year’s home-building numbers are double last year’s numbers for this time of year, which were double the previous year’s numbers. And pointing to a new eight-storey building on Dunlop Street West, with some affordable housing units now being advertised for rent, he said there is some indication of the new housing coming online.

But those additional homes and apartments appearing on the market is only a start in efforts to ease the local housing crisis. The many projects currently going through the approval process can take several years before they are built and occupied.

The supply-and-demand equation is still out of whack, Lehman said, meaning housing remains out of reach for many.

According to the Canada Mortgage and Housing Corporation (CMHC) annual report released in February, Barrie’s vacancy rate stood at 1.6 per cent, among the province’s lowest, behind Peterborough and Kingston.

A bulk of the current demand on rental housing appears to be focused on larger units, as prices for two-bedroom apartments continue to increase, while there are reports that the cost of renting smaller apartments have been decreasing. indicates the average rent for a studio apartment in Barrie decreased by 15 per cent to $1,025 in the past month with a one-bedroom renting for $1,680, down nine per cent. But it showed a three per cent increase in two-bedroom apartments with rents averaging at $1,950.

Zumper analyzes rental data from hundreds of active listings across the country. reported similar findings based on data from its monthly listings with one-bedroom apartments dropping in price but two-bedroom units going up nearly 20 per cent over last year.

Nationally, it reports rents across the country rose 3.7 per cent, the largest monthly increase it’s noted in three years.

The demand in Barrie, according to content director Paul Danison, appears to be for larger units.

“So what we’re seeing is people moving from their downtown (Toronto) one-bedroom matchbox kind of place” to larger quarters, putting pressure on the larger units and driving up those prices.

Rob Hilton, of A. G. Secure Property Management Inc., the largest provider of low-density residential rentals in and around Barrie, observed that prices are reflecting the traditional cycle back post-COVID for family-type rentals. And local supply of single-family homes is very limited.

He does see rents going up for the limited number of small units available, but not by as much as the larger units.

“Based on my observation, the real-estate market turned basically the day Russia invaded Ukraine,” Hilton wrote in an email. “Inflation and interest rate hikes have put further dampening on the market.

“This means as fewer are getting into real estate, they are either staying in existing properties, or they are deciding to rent," he added. 

Another recent trend he’s noticed is the addition of million-dollar-plus houses that were up for sale now being used as rentals.

The expectation is that increasing interest rates, which have put a chill on recent house sales, will make it more expensive to carry rental units. Luc Woolsey, president of the Barrie & District Association of Realtors (BDAR), suspects rising rates will put further pressure on rental prices.

On the house sales front, prices are ebbing from their all-time high in February.

The average price of a home sold in Barrie in May was $841,040, down 5.9 per cent from the previous month, but still up 13.1 per cent year-over-year, according to BDAR. 

The number of listings increased in May, but the estimated two months of available inventory means it continues to be a seller’s market.

“We’re back to prices now that we saw somewhere between November and December last year,” said Woolsey. “They’re probably going to go down a little bit further, but I think we’re very much nearing the bottom of what we’re going to see in terms of any price reduction because nothing has changed in terms of demand or of availability of housing stock.”

Those increasing interest rates, with further increases anticipated this year, drives up the cost of borrowing. But Woolsey expects the demand on the limited number of homes available will keep prices somewhere around current levels.

He also believes there are buyers waiting to see if house prices will reduce further before making the purchasing plunge.

The hope is that the building market can sustain the current pace of home development in Barrie.

Council continues to approve other housing developments and anticipates that they, too, will come online in the coming years.

However, Lehman fears high inflation and increasing interest rates could well dampen some of those prospects.

“We still have a long way to go before this really helps the people that are struggling the most,” he said. “Right now, what we need to focus on in the city is all of this purpose-built rental supply, which has been proposed to us… now moves through the construction process."