Westdale in transition: Hamilton student houses selling as online learning means fewer tenants

Josh Arbess, a fourth-year engineering student at McMaster University, did his studies this year from his student rental house in Hamilton, even though courses were online.

The 21-year-old Toronto resident says he was already paying rent to avoid losing his place, and he anticipated it would make things feel as normal as possible" during such an unusual year.

My housemates decided to go as well, so we bubbled together and it was nice to live with them," he says.

But he wasn't among the majority. Arbess estimates only about 40 per cent of his school friends came to Hamilton this year, and one of those who did stayed home after the holidays. Although not what he'd call dead," he said the neighbourhoods around the university were notably quieter than usual. He doesn't expect them to fully bounce back.

There is a realization that not everything will require us to be in Hamilton in order to complete our degrees."

It's a trend that appears to be scaring some landlords who rent to students out of the business. There's been an increase in sales of student rental houses this year; homes with numerous bedrooms and often less-than-usual shared space. According to analysis by realtor Bonnie Glen, in March 2021, 26 houses with four bedrooms or more sold in Hamilton West, compared to nine during March 2020 - although sales that month decreased sharply midway through with the onset of the pandemic.

Realtors say they're seeing increased interest in the neighbourhood from buyers who want to remodel and move in, which could foretell a demographic shift.

My sense is that the buyers are people that actually want to live in them," said Glen, a realtor with Royal LePage Burloak whose clients are showing interest in Westdale and Ainslie Wood. Many of the sellers, she says, appear to be investors who needed the rental income to cover costs.

I suspect there are a lot of highly-leveraged properties, and without the normal income from students, owners have had no choice but to sell," she said. There are also owners that are cashing in on the (strong) market. You can sort of tell which is which based on the condition of the house. The (ones being sold out of necessity) tend to take a little longer to sell because they typically need an enormous amount of work."

Glen says the average price in the area was $782,000, compared to $593,440 last year - an increase in line with the rest of the city.

It's not unusual for these houses to have six to eight bedrooms in a 1,200-square-foot house. If a buyer is planning to convert to a single-family dwelling, they will have to pump a significant chunk of change into the house. They also tend to have very little landscaping and generally are in a state of disrepair."

Realtor Michael St. Jean says student rental investors looking at an uncertain future are moving their money into different types of real estate. However, he says that while the changes to student life caused by COVID-19 have sped up sales, he's been advising investor clients to steer clear of student rentals for some time because of several new developments planned for the coming years.

There hasn't been many options for student accommodation up to this point," St. Jean said. Now, a number of student rental dedicated developments are coming to the Main West area and downtown; hundreds and hundreds of units in larger buildings ... That whole (Main Street West) strip is going to be very dense."

One Main Street West project, just east of the university, will include housing for 1,400 first-year students.

When you start introducing nice, new modern amenities and buildings suited to the students (with) great areas for co-working, and amenities like pools and gyms, you're going to see the demand for these houses decrease dramatically."

On the buyer side, he's seeing interest from people who like the area's housing stock and access to Westdale Village, and are hoping to be part of a demographic shift away from such a dense student population.

A lot of people ... have shied away from the Westdale/McMaster area because of the stigma of the student rentals," he said. You can buy a nice property ... and a few doors down there's a property with a sofa on the porch. You're going to see more end users coming, buying the homes that have good bones and retrofitting them as single-family homes."

But some investors are still buying. Realtor Natalie-Jean Vancardo, with Sutton Group About Town Realty, recently sold a two-unit, 12-bedroom house at 279 Bowman St. to an investor. The home sold in 16 days for $1.52 million, which was $30,000 less than the asking price.

Vancardo says she's seeing an increase in people looking to buy houses in the area for themselves, but there's still lots of investors shopping. However, she says, even some investors are looking at converting homes in the area to single-family rentals.

That makes sense to her - she's seen many student rentals sitting empty.

You have vacant properties you can tell were for students that were up with no leases attached," she said. With the uncertainty of the students going back to school ... the properties that did not have seasoned students (already renting) are going to be drastically impacted."

Arbess, the McMaster student, says that while some may choose remote learning if it remains an option, there will likely always be a strong contingent of people who want to live near the school.

Students will want that campus experience," he said. There might be less demand in the future, but it will still be there."

Saira Peesker is a freelance writer who lives in Hamilton.