WATERLOO REGION — Housing prices may be falling but spiking interest rates could keep potential homebuyers as renters a little while longer.

That makes the rental market competitive, keeping rents high, said Jim Lafitte, a Waterloo-based real estate agent with Chestnut Park Realty.

Monthly rents for a one-bedroom condo in the Waterloo Region range from $1,750 to $2,000, he said.

“You saw a rapid rise in rents, but it seems like rents are stabilizing. But they are stabilizing at high numbers,” he said.

Despite dropping housing prices in the region, rising interest rates — now at 4.25 per cent — means a young person looking to buy may hold back because “you can’t afford what you think you want,” Lafitte said.

“And then because you don’t have enough rental inventory, it’s pushed rents up,” he said. “More people end up renting and that creates a bigger renter pool.”

According to Zumper, a site that hosts rental listings and aggregates online price data from larger cities, the median price for a one-bedroom apartment in Kitchener as of Dec. 15 was $1,780.

Vancouver and Toronto have the highest rents in the country. In Vancouver, the median rent is $2,470 for a one-bedroom, while in Toronto it’s $2,260.

Realtor Mike Milovick of Royal LePage Grand Valley Realty in Kitchener is the past president of the Waterloo Region Apartment Management Association. He works with investors wanting to buy income properties.

“It’s definitely a landlord market right now,” he said.

Milovick said he has two listings in a building on Larch Street in Waterloo. Last year, the rent was $1,800 and now a one-bedroom plus a den is at $2,600.

“There seems to be a real shortage,” he said.

Another pressure on the rental market is the investors who bought an investment property when interest rates were lower, and are now increasing rents to cover higher interest costs.

“They’re getting crushed by the increasing interest rate and as a result they need to pass along their costs to the tenants,” Milovick said.

“Instead of 1.5, they are at 4.9 or 5.3 per cent. That is a significant cost the landlord has to deal with,” he said.

Rebecca Wagner rents a one-bedroom condo at Charlie West, a condo tower in downtown Kitchener. She is moving on Feb. 15 because her landlord is increasing her rent from $1,750 to $2,750.

An increase of $1,000 a month makes living there unaffordable, said Wagner, who moved into the Charles Street West building last January.

The Landlord and Tenant Board capped rent increases to 1.2 per cent in 2022 and 2.5 per cent in 2023. However, a change to the Residential Tenancies Act in 2019 exempts all residential units first occupied after Nov. 15, 2018, from the caps on rent increased.

Wagner said she didn’t know why her rent jumped but said that kind of exorbitant increase should not be passed on.

“It’s unfortunate because that burden is being passed on to vulnerable tenants,” said Wagner, who is looking for another place to live. Most comparable condos are renting for $250 more than what she is paying now.

“I shouldn’t be facing relocation and huge additional payments because my landlord had made what was probably a poor financial decision,” she said.

When Wagner moved last January into Charlie West, her monthly rent costs went up by $300. And now with comparable units at about $2,000 a month, she fears another monthly increase.

“If mortgage interest payments are going up for landlords, I’m not sure why that should automatically be passed on to tenants. Shouldn’t that be the cost of doing business?”

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