Lee Quaile

Broker or Record

The end of the summer vacation season tends to be a hectic time for most people, but it’s always been doubly so for residents of Waterloo – for visiting students and year-rounders alike. With three major post-secondary institutions to be found within five minutes of the centre of town, late August and early September each year bring a surge of population back to what’s always been a relatively slower-paced city over the lazy summer months.

With a full-time population of just over 120,000 at the end of 2021, Waterloo can hardly be considered a small centre, but the impact of the returning students on demand for services and housing is difficult to overstate. According to information released and regularly updated by the schools themselves, as many as 91,000 people flood back into Waterloo and the immediate surrounds every fall to enroll in UW, WLU and Conestoga College.

While the advent of remote learning has taken a bite out of the overall total of on-campus students in recent years (especially during the previous two years, on account of the pandemic), a significant proportion of this number will turn up physically in Waterloo, seeking off-campus rental accommodations to call home during their academic year. Estimates vary, but it’s safe to say that Waterloo’s population grows by approximately 25% each September – an enormous added pressure to a rental market that’s already gone crazy over the past year.

Although CMHC’s annual rental market report doesn’t break out purpose-built student housing or licensed off-campus dwellings from the overall rental pool, this year’s numbers do give a sense of just how tight supply in and around Waterloo really is this year. Dating to February of this year, CMHC states that the vacancy rate in our region’s purpose-built rental market is only 2%. This compares to figures in other nearby university centres, emphasizing how strong Waterloo’s rental market really is – the figure in Toronto is 4.4%, 2.8% in Hamilton, 3.5% in Windsor, and a very similar 1.9% in both London and St Catharines-Niagara. And although the data won’t be released for another six months to support this speculation, I’ve heard and seen more than enough anecdotal evidence over the past several weeks to suggest that vacancy rates are now standing even lower in Waterloo Region, as high real estate prices have forced more people to scramble for rental accommodation.

The incoming pool of student renters at this moment will only add more pressure to this supply and demand imbalance, as not everyone will have been successful in securing new digs for the school year ahead of time. According to CMHC’s report:

“Students who spent the past year outside the region [largely as a result of remote learning during the pandemic] may have lacked the relationships and experience to form households and find rental housing. In addition, the loss of some student occupied housing to non-student tenants possibly tightened the rental apartment market more than normal. The continued return to in-person instruction will likely drive activity and tightness in the student market in the upcoming year.”

If you’re familiar with what I publish in this space, you’ll already know that my ‘bread and butter’ for many years has been the student housing market in Waterloo. I’ve pointed my investor clients in this direction for well over a decade now and have backed up my confidence in the market by being a stakeholder myself over all these years, too. Even though there was a great deal of uncertainty two years ago as COVID took hold over how the student housing market would be impacted, and when (or indeed even if) it could be expected to bounce back, student housing as an investment has been incredibly resilient. Now, as even more students are returning to in-person learning, the situation is improving even more month by month.

In an overall economic climate of climbing interest rates and general unease, it can be more challenging to view real estate as a smart long-term investment. But our area’s track record of steady growth and booming post-secondary education industry make student housing about as rock-solid of an investment as they come.  

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