Canada's Rental Market Cools for a 20th Straight Month, Easing Pressure Behind STR Crackdowns

Canada’s rental market posted its clearest sign yet of a broad cooldown in 2026, with implications for the short-term rental sector that has spent the past several years under mounting regulatory pressure. According to the Canada Mortgage and Housing Corporation’s mid-year rental market update, average asking rents fell 4.7 percent year over year in May, the 20th consecutive month of decline. Landlords are increasingly offering incentives to attract tenants, including several months of free rent, discounted parking and cash bonuses, a level of concession not seen in the market for years.

National rents remain up 22.1 percent since April 2021, but have now fallen 7.8 percent from their May 2024 peak of 2,202 dollars, according to the CMHC data. A separate Q3 2026 multifamily report found national vacancy climbing to 4.7 percent, the first increase after nine consecutive quarters of decline, with the loosest markets in Calgary at 6.8 percent and Edmonton at 5.8 percent, while Halifax at 2.4 percent and Winnipeg at 2.8 percent remain the tightest in the country. CMHC now recommends treating roughly 4 percent vacancy as balanced for most Canadian markets, and over 5 percent for Alberta specifically, moving away from the traditional 3 percent benchmark used for years.

The shift carries direct consequences for short-term rental policy. British Columbia’s principal residence requirement, introduced to push short-term rental units back into the long-term housing pool, allows municipalities with a rental vacancy rate of 3 percent or higher for two consecutive years to opt out of the rule entirely. The province recently accelerated that opt-out timeline, moving the annual application window to February 28 for a June 1 effective date starting in 2027, better matching summer tourism demand. Kelowna has already secured a one-time exemption to use the faster schedule in 2026. With national vacancy now climbing, more municipalities across the province are positioned to clear the 3 percent threshold than at any point since the rule was introduced.

Affordability trends diverged by city. Edmonton and Toronto saw conditions improve for existing tenants thanks to slower rent growth paired with strong wage gains, while Calgary and Halifax experienced the sharpest deterioration. Immigration and household formation, particularly among younger renters, are expected to keep driving renter population growth through the rest of 2026, even as supply catches up in several major markets.

For short-term rental operators and policymakers, the data matters because much of the political case behind aggressive STR-to-long-term-housing conversion mandates rested on acute rental scarcity. A broadly softening national market gives municipalities less justification for the most restrictive measures, and strengthens the case for opt-out mechanisms like BC’s. That said, the national figures likely mask continued tightness in specific tourist towns, university markets and resort communities, where short-term rental concentration remains highest and local housing pressure is unlikely to ease at the same pace as the national average.

The data

Metric	Figure
National asking rent change (YoY, May 2026)	-4.7%
Consecutive months of rent decline	20
Rent change since April 2021	+22.1%
Rent change from May 2024 peak ($2,202)	-7.8%
National vacancy rate (Q3 2026)	4.7%, first rise in 9 quarters
Loosest markets	Calgary 6.8%, Edmonton 5.8%
Tightest markets	Halifax 2.4%, Winnipeg 2.8%
BC STR opt-out threshold	3%+ vacancy, 2 consecutive years
New BC opt-out window (from 2027)	Feb 28 application, Jun 1 effective

Primary sources: CMHC’s 2026 Mid-Year Rental Market Update, a Q3 2026 multifamily report, and BC government announcements on short-term rental policy.