The Cost of Course Correcting International Student Intake: Can College Towns Avoid a Hard Landing?
October 3, 2025
By Allwyn Dsouza, Senior Analyst, Research and Insights, REIC/ICI
By Allwyn Dsouza, Senior Analyst, Research and Insights, REIC/ICI
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Market has turned for real estate in Canada’s college towns. For years, surging international student enrollment drove a miniboom in these markets – more students meant more roommates to fill rentals, more investor buyers snapping up houses to convert to student lodgings, and upward pressure on rents and prices. A case in point was Conestoga College in Kitchener, Ontario. By 2023, Conestoga became “a poster child for aggressive international student recruitment,” swelling to 45,000 students (international students vastly outnumbering domestic) in four years[1]. The college’s study permits soared 31% in one year to 37,000 in 2023 – the most of any institution in Canada[2]. This “flood of new money” benefited the school’s finances, but it overwhelmed local housing capacity. As a result, students struggled to find affordable rooms, and rents spiked amid the scramble for scarce accommodations.
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In the wake of new federal policies, that trend is hitting a wall. In January 2024, Canada announced a two-year cap on study permits to rein in record international student numbers, aiming to ease housing pressures. The cap slashes new study permits by about 35% – from roughly 553,000 in 2023 down to ~360,000 in 2024[3]. This abrupt policy shift is rippling through student-heavy housing markets. Towns that once boomed on an influx of students now face a starkly changed landscape: vacancies are rising, rental growth is stalling, and even home prices are softening. At Conestoga, the Ontario government allocated just 15,000 study permits for 2024 – less than half of what the college saw the previous year[4].
Vacancies Climb in Student-Driven Markets
Figure 1.0
Figure 1.0
Source: CMHC Housing market outlook
Across Canada’s university and college towns, rental vacancy rates have jumped to levels unseen in years. Student hubs (KCW, Niagara, Windsor) are ~1.1–1.6 percentage points above the 2.2% national average. That’s a relative weakening against both national and many non-student sub-markets. The Kitchener–Waterloo–Cambridge area, home to Conestoga College and two universities, is a bellwether. In fall 2024, the purpose-built rental vacancy rate in K-W spiked to its highest level since 1993[5]. Largely due to the collapse in student demand: the cap on international students sharply reduced the pool of renters, especially in Kitchener’s east side and the City of Waterloo where student housing is concentrated.
Other student-centric regions show similar trends. In Hamilton, home to McMaster University and Mohawk College, vacancies have risen most in the West End student quarter, which saw demand fall due to declining international enrolment[6]. More telling is the effect on rents: Hamilton’s average two-bedroom rent growth plunged to just 2.3% in 2024 from a red-hot 13.7% in 2023, as the student renter decline and new supply tempered landlords’ pricing power.
In London, Ontario – which hosts Western University and Fanshawe College – the rental market hit a near-decade high vacancy in 2024 at 2.9%[7]. That may sound moderate, but it’s roughly double London’s vacancy from a couple years prior. The data bears it out: the emptiest pockets were London’s northeast and northwest zones, where many Western and Fanshawe students normally rent[8].
A similar story is unfolding in Windsor, St. Catharines–Niagara, and other mid-sized markets. Windsor’s purpose-built rental vacancy rose to 3.3% – particularly in the central and west end neighborhoods near the University of Windsor – after local landlords reported fewer international students arriving. And in the Niagara region, which includes Brock University and Niagara College, vacancy hit 3.8% (the highest since 2013)[9].
It’s a remarkable reversal from the ultra-tight rental conditions of 2022–2023. What is alarming is that according to CMHC’s forecast the vacancies are expected to rise further in these student dependent towns even as vacancies across the nation and surrounding areas are expected to stabilize by 2027.
Other student-centric regions show similar trends. In Hamilton, home to McMaster University and Mohawk College, vacancies have risen most in the West End student quarter, which saw demand fall due to declining international enrolment[6]. More telling is the effect on rents: Hamilton’s average two-bedroom rent growth plunged to just 2.3% in 2024 from a red-hot 13.7% in 2023, as the student renter decline and new supply tempered landlords’ pricing power.
In London, Ontario – which hosts Western University and Fanshawe College – the rental market hit a near-decade high vacancy in 2024 at 2.9%[7]. That may sound moderate, but it’s roughly double London’s vacancy from a couple years prior. The data bears it out: the emptiest pockets were London’s northeast and northwest zones, where many Western and Fanshawe students normally rent[8].
A similar story is unfolding in Windsor, St. Catharines–Niagara, and other mid-sized markets. Windsor’s purpose-built rental vacancy rose to 3.3% – particularly in the central and west end neighborhoods near the University of Windsor – after local landlords reported fewer international students arriving. And in the Niagara region, which includes Brock University and Niagara College, vacancy hit 3.8% (the highest since 2013)[9].
It’s a remarkable reversal from the ultra-tight rental conditions of 2022–2023. What is alarming is that according to CMHC’s forecast the vacancies are expected to rise further in these student dependent towns even as vacancies across the nation and surrounding areas are expected to stabilize by 2027.
Listings Rise and Prices Soften as Investors Reassess
Figure 2.0
Figure 2.0
Beyond the rental market, the student slowdown is also affecting home sales in these communities. During the boom, small-scale investors flocked to university towns, buying up single-family homes and condos to rent out by the room. In many cases, investors could charge students – each paying for a room – more in total rent than a family would pay for the whole unit. This enabled them to outbid local homebuyers, pushing up real estate prices. Waterloo Region is a prime example where student-driven investment frenzies helped propel prices to dizzying heights during the pandemic housing surge. Now, with the economics of some student rentals looking less rosy, we’re beginning to see an impact on for-sale inventory and pricing.
In Kitchener–Waterloo, home listings have ticked up and prices have edged down. From January to July 2025, the region’s residential sales volume fell about 10%, while the number of new listings rose 8% year-over-year[10]. The local market shifted into a buyer’s market by late 2024, with inventory accumulating and homes taking longer to sell[11].
Niagara Region, saw average home prices around 4–5% lower in 2025 compared to a year earlier[12], and its listings have remained plentiful. Many Niagara investors had bought duplexes or student houses near Brock University; some of these owners may now be accepting a modest price correction as the market normalizes post-boom.
Despite the distress why we aren’t seeing a foreclosure wave—yet
The softening you see in Canada’s student belts—higher vacancies, flatter rents, weaker sales-to-new-listings ratios—is real. What hasn’t materialized (yet) is a broad foreclosure wave.
There are three reasons the market is holding that line. First, the cycle began with healthy owner equity. The pandemic run-up left many landlords with substantial cushions; when cash flow tightens, they can list and exit before default. Second, lenders are smoothing the landing—amortization extensions, more pragmatic renewal structures, and early rate relief are muting payment shock. Third, demand is broader than students alone in several hubs. In Kitchener-Waterloo and Hamilton, tech, health, manufacturing and public-sector tenants are backfilling part of the student shortfall, keeping effective rents from collapsing.
The risk window is the next 12–18 months, when a large cohort of five-year mortgages that originated in 2020–2021 (early-2022 for some) resets at higher rates precisely as effective NOI softens in student corridors. Operators who underwrote to five or six paying roommates per house—and counted on perpetual September queues—now face longer lease-ups and more turnover costs. Layer on mid-teens increase in monthly payments at renewal and you can see how high-LTV buyers slip into negative cash flow unless amortizations are extended or rents step up. Add a softer labour print or another weak intake and the NOI hole persists into Fall 2026.
Finally, one needs to watch the signs that turn caution into conviction. If September to October lease-ups in the student belts slow again—and concessions deepen—NOI risk is rolling forward. If sub-neighborhood SNL ratios hold under 40% and days-on-market lengthen, seller’s ability to hold will erode and prices will correct significantly. Subsequently, power-of-sale share will begin to climb toward over-representation (with London already there), and the narrative will shift from isolated stress to a broader clean-out. We’re not there yet but the next 12–18 months will decide whether this re-pricing ends as a reset—or becomes a reckoning for these towns.
This trend matters because many of these institutions are anchor employers and demand engines for their towns. Fanshawe College alone generates about $1.6 billion in annual economic impact for London. In the B.C. Interior, Thompson Rivers University (TRU) plays a comparable role, contributing roughly $2.2 billion provincially and $885.2 million regionally when you include operations, construction, student spending, and alumni-driven productivity.
When enrolment slows, the shock doesn’t stop at the campus gates—or with student rentals. Lower student and staff spending ripples through retail, food service, fitness, transit, and neighborhood services, softening sales for small businesses and reducing demand for street-front and strip-mall space near campuses.
As Canada’s college towns move from a student-driven boom to a re-pricing phase, the priority for policymakers and planners needs to be to stabilize housing and main-street economics while right-sizing future enrolment.
Policymakers need to make institutional growth contingent on a Housing Impact Agreement: clearly sequenced targets for on-campus beds and purpose-built student accommodation (PBSA), verified off-campus capacity, and penalties or intake pauses if milestones slip. Require annual public reporting on beds added vs. enrolment and publish pipeline dashboards by neighborhood.
As the real estate landscape evolves with new policies, incentives, and sustainability goals, REIC stands at the forefront of equipping professionals with the insights and tools to adapt and lead. Through education, certification, and applied research, REIC empowers members to interpret market trends, align with policy frameworks, and make data-informed investment and development decisions. By fostering collaboration across lenders, developers, and policymakers, REIC promotes transparent, evidence-based dialogue that strengthens community and industry outcomes. With a focus on practical knowledge and ethical standards, REIC continues to shape a new generation of real estate leaders—capable of balancing profitability with purpose and building projects that endure through changing economic and social climates.
In Kitchener–Waterloo, home listings have ticked up and prices have edged down. From January to July 2025, the region’s residential sales volume fell about 10%, while the number of new listings rose 8% year-over-year[10]. The local market shifted into a buyer’s market by late 2024, with inventory accumulating and homes taking longer to sell[11].
Niagara Region, saw average home prices around 4–5% lower in 2025 compared to a year earlier[12], and its listings have remained plentiful. Many Niagara investors had bought duplexes or student houses near Brock University; some of these owners may now be accepting a modest price correction as the market normalizes post-boom.
Despite the distress why we aren’t seeing a foreclosure wave—yet
The softening you see in Canada’s student belts—higher vacancies, flatter rents, weaker sales-to-new-listings ratios—is real. What hasn’t materialized (yet) is a broad foreclosure wave.
There are three reasons the market is holding that line. First, the cycle began with healthy owner equity. The pandemic run-up left many landlords with substantial cushions; when cash flow tightens, they can list and exit before default. Second, lenders are smoothing the landing—amortization extensions, more pragmatic renewal structures, and early rate relief are muting payment shock. Third, demand is broader than students alone in several hubs. In Kitchener-Waterloo and Hamilton, tech, health, manufacturing and public-sector tenants are backfilling part of the student shortfall, keeping effective rents from collapsing.
The risk window is the next 12–18 months, when a large cohort of five-year mortgages that originated in 2020–2021 (early-2022 for some) resets at higher rates precisely as effective NOI softens in student corridors. Operators who underwrote to five or six paying roommates per house—and counted on perpetual September queues—now face longer lease-ups and more turnover costs. Layer on mid-teens increase in monthly payments at renewal and you can see how high-LTV buyers slip into negative cash flow unless amortizations are extended or rents step up. Add a softer labour print or another weak intake and the NOI hole persists into Fall 2026.
Finally, one needs to watch the signs that turn caution into conviction. If September to October lease-ups in the student belts slow again—and concessions deepen—NOI risk is rolling forward. If sub-neighborhood SNL ratios hold under 40% and days-on-market lengthen, seller’s ability to hold will erode and prices will correct significantly. Subsequently, power-of-sale share will begin to climb toward over-representation (with London already there), and the narrative will shift from isolated stress to a broader clean-out. We’re not there yet but the next 12–18 months will decide whether this re-pricing ends as a reset—or becomes a reckoning for these towns.
This trend matters because many of these institutions are anchor employers and demand engines for their towns. Fanshawe College alone generates about $1.6 billion in annual economic impact for London. In the B.C. Interior, Thompson Rivers University (TRU) plays a comparable role, contributing roughly $2.2 billion provincially and $885.2 million regionally when you include operations, construction, student spending, and alumni-driven productivity.
When enrolment slows, the shock doesn’t stop at the campus gates—or with student rentals. Lower student and staff spending ripples through retail, food service, fitness, transit, and neighborhood services, softening sales for small businesses and reducing demand for street-front and strip-mall space near campuses.
As Canada’s college towns move from a student-driven boom to a re-pricing phase, the priority for policymakers and planners needs to be to stabilize housing and main-street economics while right-sizing future enrolment.
Policymakers need to make institutional growth contingent on a Housing Impact Agreement: clearly sequenced targets for on-campus beds and purpose-built student accommodation (PBSA), verified off-campus capacity, and penalties or intake pauses if milestones slip. Require annual public reporting on beds added vs. enrolment and publish pipeline dashboards by neighborhood.
As the real estate landscape evolves with new policies, incentives, and sustainability goals, REIC stands at the forefront of equipping professionals with the insights and tools to adapt and lead. Through education, certification, and applied research, REIC empowers members to interpret market trends, align with policy frameworks, and make data-informed investment and development decisions. By fostering collaboration across lenders, developers, and policymakers, REIC promotes transparent, evidence-based dialogue that strengthens community and industry outcomes. With a focus on practical knowledge and ethical standards, REIC continues to shape a new generation of real estate leaders—capable of balancing profitability with purpose and building projects that endure through changing economic and social climates.
[1] kitchener.citynews.ca
[2] kitchener.citynews.ca
[3] reuters.com
[4] kitchener.citynews.ca
[5] cmhc-schl.gc.ca
[6] cmhc-schl.gc.ca
[7] cmhc-schl.gc.ca
[8] cmhc-schl.gc.ca
[9] cmhc-schl.gc.ca
[10] blog.remax.ca
[11] blog.remax.ca
[12] niagarahomes.com
[2] kitchener.citynews.ca
[3] reuters.com
[4] kitchener.citynews.ca
[5] cmhc-schl.gc.ca
[6] cmhc-schl.gc.ca
[7] cmhc-schl.gc.ca
[8] cmhc-schl.gc.ca
[9] cmhc-schl.gc.ca
[10] blog.remax.ca
[11] blog.remax.ca
[12] niagarahomes.com
Allwyn Dsouza is REIC’s Senior Analyst, Market Research and Insights. He can be reached at [email protected]. Media enquiries can be directed to [email protected].