Emily Mathieu / The StarMetro Vancouver / November 22, 2018
A conversation about housing has to start with numbers.
Whether you’re a tenant struggling to find a home or a government crafting new policy during a nationwide housing crisis, you need to have a grip on good data.
The hunt for rental housing, particularly in Toronto and Vancouver, has become increasingly competitive and confusing as the number of people looking to live in cities continues to outpace what is actually being built.
“Renters going to shop for a place to rent have almost no information,” said David Hulchanski, a housing and community development expert at the University of Toronto, who maps and studies the factors that drive neighbourhood change. “Most consumers shop blindly, they don’t know what is going on in different geographic areas.”
To try to cut through that confusion and provide renters with a bit more insight on where neighbourhood prices are heading the Toronto Star built an interactive map showing how a big slice of the complex market — purpose-built rentals — have gone up in price. The yearly average rents were provided by the Canada Mortgage and Housing Corporation, which tracks and reports information on rental prices and vacancy rates. The Star used those numbers to calculate how much average market rent for purpose-built rentals in the 15 largest metropolitan areas across the country changed between 2012 and 2017.
Consumers, Hulchanski said, “need to be forewarned that over a five-year period that has been the change in rents,” in the neighbourhood they might want to live in. “A good consumer needs information and this is helpful information.”
The map has a drop-down menu that allows users to check out the percentage increase on rent for bachelor, one-bedroom, two-bedroom and three-bedroom apartments, and the overall average. Not every type of apartment is included, as the map was built using data for occupied, privately-initiated, purpose-built rental buildings with three or more units. It does not capture, for example, basement apartments in Calgary, a two-bedroom unit at the top of a Montreal home, or a condominium for rent in Toronto. The map boundaries are based on groupings of census tracts used by Statistics Canada. Neighbourhoods where data was not available for more than one year, on either end of the 2012 to 2017 range, are shaded grey.
Hulchanski said the map can be used as a window into broader neighbourhood trends. People can see what tenants are already paying in a neighbourhood, and if those amounts have increased significantly over five years they can assume that actual rent would be far higher, he said.
It will also, he said, give people who research housing policy another indicator into how gentrification and lack of new supply is affecting certain areas.
“In the rental side there is mainly demand and it is not what economists could call effective market demand. That is, there are not enough people with enough money to pay for the rents that are required for new construction,” he said.
Shaun Hildebrand, president of market research firm Urbanation, also cautioned the numbers cannot be used to predict the actual cost of future rents.
“What the average tenant is paying is not what the average tenant would pay if they rented today,” because the rental prices CMHC reports are primarily for occupied units and people tend to hold on to those rental homes, he said. In terms of Toronto, he said, any significant spikes in price are likely attributed to landlords charging much higher prices for new or empty units, which are rare.
Tim Ross, executive director of the Co-operative Housing Federation of Canada, said all data, historical or otherwise, is needed for effective conversations around housing. The federation used CMHC rental data to help demonstrate that co-operative housing is “bulletproof” to fluctuations in the rental market, he said. What the federation found was the cost of a one-bedroom co-operative unit in Toronto rose 7 per cent between 2013 and 2017, compared to a 16 per cent increase in a one-bedroom, purpose-built apartment in the same time period, he said.
“If anything I would urge the federal government to invest in solutions we know work and are insulated from the current volatility of the rental markets and housing markets across the country,” Ross said.
Local policy does make a difference. Tenant and landlord law is a provincial responsibility, so what goes in Toronto will differ from Halifax or Montreal. Vacancy rates and rental costs also rely on a range of factors, including local economic drivers like seasonal work in cities such as Calgary and Edmonton.
One way to learn how those policies impact broader housing health is through the Canadian Rental Housing Index, which maps out the percentage of income people in different areas are spending on rent.
The need for better and more complete data on housing has been identified as a national priority. The federal government has pledged $241 million to be used towards research, data collection and outcomes over the next 10 years as part of the National Housing Strategy.
New studies being conducted across Canada will include the Social and Affordable Housing Survey — Rental Structures. CMHC spokesperson Audrey-Anne Coulombe said the annual survey will collect information on rental costs, building services, wait lists and building condition.
To find out what is happening in rental markets in major cities across Canada, the Star reached out to housing experts to talk about past trends and what renters can expect in the future.
Halifax
Halifax’s rental market is tighter than it’s been in more than a decade.
The vacancy rate for purpose-built rental stock with three or more units — the basis for the CMHC vacancy rates — in Halifax was 2.3 per cent in October 2017, according to the CMHC, the lowest since October 2003.
The Star’s analysis of purpose-built rental data shows most areas saw average rents for those units increase between 10 and 20 per cent from 2012 to 2017.
There are some outliers, however.
The Star’s analysis shows average rent in the Woodside/Eastern Passage area, for example, increased 95.7 per cent in the same period. The increase was 43.7 per cent in Timberlea/Beechville and 55.7 per cent in Fairmount.
Neil Lovitt, senior manager of planning and economic intelligence at Halifax real estate consulting firm Turner Drake, said new construction likely skewed the numbers in those areas.
“First of all, it’s a small rental market to begin with, there’s not a lot of units, so any new building is going to create a bigger splash,” he said, referring to Woodside/Eastern Passage. “The existing supply, which is maybe one or two hundred units, rent probably hasn’t changed in those at all, but you’re just adding in a comparatively large number of very new buildings that would obviously start at a much higher price.
“It tilts the average figure up quite significantly.”
In general, Lovitt said the “addition of new, more expensive units into the market” explains much of the increase in average rents.
“The older units have, up until very recently, not really seen that much rental growth,” he added.
Lovitt said the perception that there’s a construction boom in Halifax is a matter of visibility: the rate of construction hasn’t changed, it’s just moved downtown from the suburbs.
Both he and the CMHC, in its 2017 report, cite strong immigration numbers as one reason for increasing rental demand in Halifax, especially over the last two to three years.
“For the last couple years before that, we were building a lot and there was starting to be, I think, a bit of anxiety as to whether or not we were overbuilding,” Lovitt said. “And then these population trends have sort of come in to offer some support to that.”
Whether the trend will continue is hard to predict, Lovitt said, as is the downward trend with the vacancy rate.
“It depends on the pace of buildings being completed,” he said. “I guess you could say there’s a race between supply and demand — basically, new construction and new residents.”
— Zane Woodford, StarMetro Halifax
Toronto
Toronto is rapidly becoming a city of glistening glass towers, although one with fewer and fewer affordable places to live.
What was considered somewhat accessible to the average renter, purpose-built stock hit a 1.1 per cent vacancy rate, according to the CMHC’s 2017 rental market report.
“The higher density zoning and rezoning that was once for rental housing, is now used for condo buildings,” said U of T’s Hulchanski, explaining one factor behind Toronto’s rental housing crunch. Condominium units do end up on the rental market, he said, but are aimed at people with higher incomes.
The Star’s analysis of CMHC numbers on average cost for purpose-built rental units showed that in Toronto close to 20 neighbourhoods reported a 20 per cent or higher increase in average market rent between 2012 and 2017.
Dana Senagama, CMHC manager of market analysis for the GTA, stressed those figures don’t show average market movement, as they don’t contain new builds and renovated units. Spikes do indicate how an ultra tight vacancy rate and lack of new supply can impact prices, she said, or gives a snapshot of overall market demand. “A landlord can’t raise your rent unless somebody is willing to pay for it,” Senagama said.
Hulchanski said the map shows where gentrification is taking hold. One stark example, he noted, was the Dufferin Grove/Little Portugal area where the Star’s analysis showed the average cost of a one-bedroom unit spiked 38.6 per cent between 2012 and 2016.
The area identified as South Parkdale/King West, where the Star’s analysis showed a one-bedroom rose 9.8 per cent between 2012 and 2017, are also becoming increasingly desirable and the data reflects that, he said.
In Toronto, the rent on occupied units can only be raised a fixed amount set by the province each year. However, in November the provincial government ruled landlords could raise the rent on newly constructed units any amount — occupied or not.
Urbanation’s Hildebrand said the actual demand for rental housing is close to 25,000 new units, each year. The GTA is on track to complete 20,000 condos next year, he said, of which half will end up as rentals, and up to 5,000 purpose-built units. There are close to 11,200 purpose-built rental units under construction, he said, about the same total amount built since 2005.
“The level of purpose-built rental would need triple to move the market into balance,” he said.
— Emily Mathieu, Toronto Star
Calgary
The city’s rental market is starting to show signs of a recovery after years of units sitting empty in Alberta’s slumping economy.
Calgary’s vacancy rate had hovered at or below 1 per cent as the oil industry boomed in the mid-2000s. When the bottom fell out, the numbers gradually increased, hitting 7 per cent in October 2016 — the highest rate measured by the CMHC in more than 25 years.
The rate inched down to 6.3 per cent in 2017 despite a construction boom that brought nearly 2,000 more new units into the market compared to the previous year.
For industry watchers, those numbers point to larger trends.
“The economy is growing, people are moving into the city,” said Lai Sing Louie, an economist with the housing corporation.
With that, the CMHC is forecasting prices will again increase.
The recession’s impact on rent played out differently in neighbourhoods across the city.
Prior to the downturn, average rent was increasing almost everywhere. That trend flatlined in most neighbourhoods when the recession hit, but in looking at CMHC data for purpose-built rentals from 2012 to 2017, the Star’s analysis shows some areas actually saw prices for those units dip.
South Calgary’s Canyon Meadows saw the biggest overall change with prices down 11.2 per cent in the five-year period, the analysis shows.
The discrepancies could be attributed to a key finding from CMHC surveys that collected information on renter behaviour.
“Last year, one of the primary reasons for moving was for employment reasons,” Louie said. “That tends to create turnover and vacancy rates in different neighbourhoods at different times.”
— Andrew Jeffrey, StarMetro Calgary
Edmonton
Edmonton remains a renter’s market thanks in part to the lingering effects of Alberta’s oil-fuelled recession and a steady supply of new residential developments.
The average vacancy rate for purpose-built rentals jumped from 2 per cent in 2014, when the recession started, to 4 per cent in 2015, according to the CMHC. It’s since levelled off at 7 per cent for both 2016 and 2017.
Average rents, meanwhile, have generally continued to increase, albeit at a slower pace than before the economic meltdown with the price in some neighbourhoods practically holding steady between 2014 and 2016.
The city’s rental market has been less affected than those in some other parts of the province. That could be attributed to a variety of factors, including strong demand from post-secondary students and the recession’s overall lessened impact on Edmonton compared to cities with deeper ties to the oil industry, said James Cuddy, an Alberta analyst with CMHC.
There are signs, however, that vacancy rates are starting to dip and prices are starting to climb faster as the recession wanes, Cuddy said. He expects that to be reflected in the housing corporation’s 2018 report due out later this month.
Core neighbourhoods such as Bonnie Doon, Grandin and McCauley started seeing average rent increase as early as 2016 because they are in high demand, Cuddy said.
— Omar Mosleh, StarMetro Edmonton
Vancouver
Jill Atkey, CEO of the B.C. Non-Profit Housing Association, has been tracking not just the price of rent throughout the province but how income levels have failed to keep up with the rising cost of housing.
While Vancouver has a reputation for unaffordable housing, Atkey says it’s suburbs like Burnaby, Surrey and Coquitlam that have become the most unaffordable for renters.
Over the past five years, “we saw households spending more than 30 per cent — and more than 50 per cent — of their incomes on rent,” Atkey said. “So it really was becoming the new normal to be spending more than you can afford.”
Average rent for purpose-built rentals in downtown Vancouver rose by 25.6 per cent between 2012 and 2017, according to a Toronto Star analysis of CMHC data. But in the District of Langley, on the far eastern edge of the Metro Vancouver region, rents rose by a whopping 68 per cent in the same time period.
And it’s not just big cities where renters are feeling the pinch. Many smaller communities are also struggling with the same housing conundrum, Atkey said.
The good news for renters, Atkey noted, is that with so many people feeling the effect of rising housing costs, the crisis became the top issue in recent provincial and municipal elections. Governments have started to invest in a big way with provincial funding just announced for 4,900 units targeted at low-to-moderate income renters across B.C.
Non-profit housing developers have another 7,000 units in development through other investments, Atkey said, and, for the first time in 30 years, many municipal governments are prioritizing new purpose-built rental buildings through development and fee incentives.
Atkey believes struggling renters will start to see a difference as these new projects are completed over the next two to four years.
“They’re struggling right now, so telling them two to four years from now that the struggle will be less severe is sort of cold comfort, but we are starting to turn the corner on this,” she said.
— Jen St. Denis, StarMetro Vancouver