How as a province do we go about dealing with extreme rental increases?

BY SIMONE J. SMITH

Has anyone taken a look at some of the rent prices in Toronto? Oh Lord! The affordability of housing is a concern in Ontario, and it’s a complex issue influenced by various factors. In Toronto, there is a high demand for housing due to population growth and migration, but the supply of housing has not kept pace. This has led to increased competition for available housing units, which naturally drives up prices. Let’s take a look at what is going on, and then discuss what needs to be done.

The National Rent Report charts and analyzes monthly, quarterly and annual rates and trends in the rental market on national, provincial, and municipal levels across all listings on the Rentals.ca Network for Canada. The data from the digital rental platform Rentfaster.ca is incorporated into this report. Rentals.ca Network data is analyzed, and the report written by Urbanation, a Toronto-based real estate research firm providing in-depth market analysis and consulting services since 1981. The report was eye-opening, and there is reason for the anxiety that is felt by people looking for somewhere to live, especially in Ontario.

Toronto finished second on the list of 35 cities for average monthly rent in August for a one-bedroom at $2,620, and third for average monthly rent for a two-bedroom at $3,413.

Mississauga came in fourth on the list of 35 cities for average monthly rent in August for a one-bedroom at $2,379 and $2,872 for a two-bedroom. Year over year, average monthly rent in August for a one-bedroom in Mississauga was up 15.3% and up 18.4% for a two-bedroom.

North York came in sixth for average monthly rent in August for a one-bedroom at $2,263 and sixth for average monthly rent for a two-bedroom at $2,719. Year over year, the average monthly rent in August for a one-bedroom in North York was up 10.7% and up 6.6% for a two-bedroom.

Etobicoke finished seventh on the list for average monthly rent in August for a one-bedroom at $2,253 and fourth for average monthly rent for a two-bedroom at $2,939. Year over year, average monthly rent in August for a one-bedroom in Etobicoke was up 6.2% and up 7.4% for a two-bedroom.

Now, let’s take a look at the average asking rents. Canada reached a new record high of $2,117 in August, with a monthly increase of 1.8% and an annual growth rate of 9.6% according to the Rentals.ca and Urbanation latest National Rent Report.

Over the past three months, spanning from May to August, the Canadian rental market experienced a 5.1% increase in asking rents, equivalent to a monthly rent increase of $103.

“Unlike in the U.S., rent inflation in Canada has failed to cool down despite rental completions having reached their highest level in decades” said Shaun Hildebrand, president of Urbanation. “This is illustrative of the severe rental housing shortage across the country and the magnitude of the impact on rental demand as the population expands by a record pace.”

While Calgary maintained its position as the leader in rent growth among Canada’s largest cities, recording a 17.3% year-over-year increase to an average of $2,068 for purpose-built and condominium apartments, Montreal closely followed with annual growth of 16.4%, marking the first-time asking rents surpassed $2,000 at $2,001. Toronto and Vancouver, the country’s most expensive cities, posted below-average annual rent increases of 8.7% and 7.3%, respectively, reaching average monthly costs of $2,898 (Toronto) and $3,316 (Vancouver). Notably, average rents in Vancouver decreased by 0.7% on a monthly basis.

Annual increases were also observed in mid-sized markets, including Brampton (ON) at 21.6% to an average of $2,713; New Westminster (BC) at 17.8% to an average of $2,511; and Côte Saint-Luc (QC) at 16.4% to an average of $2,271. In Alberta, the fastest growth in mid-sized markets occurred in Grande Prairie and Lethbridge, both at 9.3%, with average rents of $1,169 and $1,276, respectively. In Saskatchewan and Manitoba, Regina led with an annual growth rate of 10.9%, while Winnipeg posted an annual increase of 8.3%.

Studio apartments recorded the most significant month-over-month rent increase, increasing by 2.4% to an average of $1,480. One-bedroom units led the year-over-year growth at 14.8%, averaging $1,880 per month. Meanwhile, two-bedroom apartments and three-bedroom units commanded average asking rents of $2,233 and $2,448, respectively, marking annual increases of 12.3% and 10.6%.

Rents for shared accommodations, such as roommate arrangements, continued to rise. In Quebec, average asking rents for shared units grew by 24.0% annually to $888 per month, followed by Alberta with 20.5% annual growth to an average of $851. In British Columbia, average asking rents for shared accommodations increased by 17.7% annually to $1,150 per month, while roommate rents in Ontario grew by a more moderate annual pace of 7.5% to an average of $1,040.

So, what now? How as a province do we go about dealing with these extreme increases? Addressing the issue of rising housing costs requires a multifaceted approach that may include:

• Increasing Housing Supply: Encouraging the construction of more affordable housing units can help alleviate shortages.
• Regulatory Reforms: Reevaluating zoning laws and regulations to make it easier and more cost-effective to build new housing.
• Affordable Housing Programs: Government initiatives to subsidize or provide affordable housing options for low-income individuals and families.
• Community Development: Fostering community development and revitalization efforts to ensure that rising housing costs don’t lead to displacement.
• Income Support: Increasing the minimum wage or providing other forms of income support to help individuals and families afford housing.
• Property Tax Policies: Implementing property tax policies that discourage speculative buying and promote long-term residency.