Finding rental housing in Niverville and the surrounding rural southeast has gotten increasingly difficult over the last several years. There are many factors behind this trend, including steady population growth, the introduction of new commercial and industrial employers, and an overall increased demand for real estate.
In the time of COVID-19, though, the hunt for rentals has gotten to be nearly impossible. Since the beginning of 2020, the pandemic has thrown the housing market into flux.
According to Greg Fehr of Red River Group, the pandemic has greatly accelerated a lot of pre-existing trends.
“People are talking about a decrease in demand for office space, for example,” Fehr says. “They were announcing five years ago, ‘Expect that in 10 to 15 years a 40 percent decrease in the need for retail and office.’ Well, now take that and just decrease [the timeframe] to three to four years. That’s all that we’ve done. It’s all accelerated.”
Red River Group is one of the largest property management companies in the rural southeast, managing approximately 450 rental units in many towns throughout the region. The bulk of these properties, Fehr says, are in Niverville. St. Adolphe, St. Anne’s, Steinbach, and Grunthal, with a smattering of units in other communities, such as St. Malo, Vita, and Morris. They also manage some property in Winnipeg.
“In March and April, we basically saw everyone staying put,” Fehr says. “All our tenants were renewing. We’d send out a renewal to people at 30 days, and they were returning them in two or three days. Nobody wanted to move. Nobody wanted to even think about moving.”
Fehr cites an example of a couple who had planned to move out of their rental suite and build a house. Although they’d signalled their intention to move out in the spring, the pandemic changed their thinking and they opted to stay put.
It was a common story in the late winter and early spring. But this trend began to turn around in May.
“In May and June, and now a bit into July, we’ve had more turnover,” Fehr says. “But it is still one of the lowest turnover rates that we’ve ever seen. From the rental management side, obviously that’s great. But it’s taken an existing problem that we had in the southeast, including Niverville, with historically low vacancy, and made it worse.”
He says this problem is especially prevalent in Niverville, where the vacancy rate is as low as two percent. Or lower.
“There’s just nothing to rent,” he points out. “Nothing. And it’s going to stay that way for a while.”
Impact of Government Programs
One of the measures brought in by the provincial government during the pandemic has been a moratorium on evictions and rent increases.
“That kind of had people freaked out, and we thought that maybe a lot of people would be taking advantage of it,” Fehr says. “But really the impact we’ve seen is about maybe one and a half percent to three percent impact. Mostly that’s an impact that we saw in April and May, until people kind of got settled into the CERB. Put it this way: of 450 rentals, I’ve maybe got four or five where the tenants are taking advantage of this whole non-eviction thing a little bit. But those are the sort of people who take advantage in any situation.”
Overall, he says the government’s quick actions, through measures like the CERB and wage subsidies, helped stabilize the market to a large degree.
“By April, the CERB was already coming out. By May, the [federal government] had filled in some additional blanks… and I think May and June is where they brought out some of the commercial incentives. So they basically stabilized everybody. There’s almost nobody left that falls within the cracks. The biggest challenge now is weening people off.”
Future Outlook
Fehr acknowledges that the gradual process of getting people back to work and off federal benefits is going to be a challenge through the rest of 2020, and it’s hard to predict how it will affect the rental market.
“There’s a significant amount of people when you talk about rentals that are making more money on CERB than they were made working,” he says. “And with almost no cost, because they don’t have to drive to work. So what I’m worried about is, as they start weening these people off—in September, October, November—not only will we likely see a bit more challenge again on the rent payments, with people potentially having to move, but we’re also going to see probably the beginnings of foreclosures as well. I think the banks will be slow on it, but the reality is there’s going to be some people struggling.”
Impact on Relationships
One of the more surprising or difficult to foresee effects of the pandemic has been on the relationships of people who cohabitate. Fehr says people don’t have to look far to hear stories of couples who have split up recently.
And as couples and roommates go their separate ways, it places further pressure on an already heavily burdened rental market. When a couple splits, they often end up looking for two rentals instead of one.
“On the appraisals side, I can back it up and say that [Red River Group’s] divorce work is considerably higher than before,” Fehr says. “There’s more stress than there ever was… Life is just different right now, and it does create a certain amount of pressure. If you had a relationship that was struggling, where you were able to escape from your partner a bit [by going to work or school], there’s not as much escape anymore. So yeah, it is leading to a lot of relationship breakdown.”
Fehr, who handles the application approvals across the entire company, says he is encountering two or three scenarios like this every week.
More Rentals Needed
The Town of Niverville has had an excellent year so far for housing starts, with 29 new builds underway. In the RM of Ritchot, they’re up significantly over 2019, with 97 housing permits being approved year to date.
But for the most part, these permits are for single-family homes.
“I don’t know if anybody’s building any significant rental housing or multifamily,” Fehr says of Niverville in particular. “We really could use more. Maybe not just apartments, but townhouses or something like that… But these projects take so long to put together. Even if you decide today you’re going to do it, it’s two years away often. The need is there.”
Before his time with Red River Group, Fehr served on Niverville’s town council, first as councillor from 2004–2006, and then as mayor for two terms, from 2006–2013.
“We were talking about this problem years ago already. My next biggest worry was affordable housing in town,” he says. “The next step is to get some actual industry here, beyond Spectis Moulders. But right now if I was a shop that was wanting to employ 50 to 100 people, I don’t know if I’d come to Niverville, because the labour pool can’t afford to live in town… there’s really no place for a blue collar person to live. And even the rentals that are there, it’s mostly new stock, and they’re a little expensive. We haven’t built economy [rentals] in a long time.”
He points to the irony of workers living in south Winnipeg and reverse-commuting to Niverville for work.
“You know, it shouldn’t ever be that you can find more affordable housing in the south of Winnipeg than you can in Niverville,” he says. “The economics don’t make sense for the marketplace. But it just is a completely pent-up demand right now.”
Local real estate agent Clarence Braun says that hopefully some relief is on the way.
“We are expecting the addition of another 104 rental apartment units in 2021, with another 156 by 2023,” Braun says, who agrees that the current vacancy rate is effectively at zero percent. “These new units are already designated and the site plans are completed.”
But for the time being, if you’re looking to rent a place, you’re going to run into major supply problems.
Fehr points to an example of the current conundrum: Red River has a rental complex in the rural southeast that has 110 units.
“Anytime you have a complex of that size, it’s typical to see it in a constant rotation,” Fehr says. “There’s always one either empty or about to empty or close to being filled. So, for this complex, we’ve had a perpetual ad running ever since we’ve had it. Well, we actually pulled down the ad two weeks ago and have had no need to put it back up—for the very first time ever. It’s 100 percent full with no potential units coming up. The next one we may have coming up is in November. It’s just unheard of.”