By Pepper Parr
May 18th, 2024
BURLINGTON, ON
The increase in rental prices has done unimaginable damage to individuals and the economy of the country. We can’t roll back the stupid mistakes that were made by the federal and provincial governments. And we are currently living with problems that the municipal sector can’t deal with. Storey an online publication that serves the property markets and doesn’t appear to be a friend of the Premier of Ontario, which is surprising – the two – property and the Premier, are often joined at the hip. The following was published by Storey.
Written by Zakiya Kassam the article draws heavily on data from Urbanation and Rentals.ca – the people doing the best data collection we have been able to find.
Average Canadian Rent Has Shot Up 32% Since ‘Pandemic Low’
In his analysis of the latest data, Urbanation President Shaun Hildebrand remarks that “the rental market in Canada has become increasingly fragmented, with expensive cities seeing rents soften and affordable markets experiencing a continued rapid escalation.”
Average Canadian rent continued to chug steadily upwards last month — something we’ve more or less come to expect from the segment as would-be homeowners hold out for interest rate cuts, leaving the rental market to soak up that demand.
According to the latest national rent report from Rentals.ca and Urbanation, the monthly asking average across all residential property types clocked in at $2,188 in April, marking a ‘near-record high,’ as well as a 9.3% increase year over year and a 0.3% uptick month over month. The month-over-month increase in particular represented “the first monthly increase in rents since January 2024.”
“However, rents were down slightly by 0.4% over the past three months, illustrating an ongoing moderation in rent growth following the sharp acceleration that occurred during the spring and summer of 2023,” Friday’s report also says.
Still, when you compare April 2024 to the “COVID-19 low” of April 2021, Canadian rent has shot up by a staggering 32%, or by an additional $526 per month.
The report highlights that there was significant nuance between average purpose-built rental and condo rents, with the former spiking 13.1% to $2,124, and the latter edging up just 3.8% to $2,331.
With affordability still remarkably pressed across the country — thank you so much, inflation — it was the smaller and (relatively) more affordable units that saw the greatest price appreciation in April. Namely: purpose-built studios, rents for which saw a steep, 17.2% rise to an average of $1,575.
Rental Market “Increasingly Fragmented”
In his analysis of Friday’s data, Urbanation President Shaun Hildebrand remarks that “the rental market in Canada has become increasingly fragmented, with expensive cities seeing rents soften and affordable markets experiencing a continued rapid escalation.” (This is something Hildebrand has drawn attention to in past reports as well.)
“Without a sufficient supply response, those affordable markets are at risk of quickly becoming unaffordable, leaving renters nowhere to turn,” Hildebrand adds.
As Hildebrand alludes to, average asking rents for apartments continued to slip in April in Canada’s major rental markets: Toronto and Vancouver.
In Toronto, rents fell 2.3% year over year and 0.9% month over month to an average of $2,757, continuing a trend that began in September 2023. In a similar fashion, rents in Vancouver dipped 7.8% year over year and 0.4% month over month to an average of $2,982.
“Apartment rents in Toronto have declined 5.4% from their peak in November 2023 ($2,913), while Vancouver rents have fallen 10.7% since reaching their high in July 2023 ($3,340),” the report also notes.
Meanwhile in Edmonton — a major Canadian city that has historically been known to be affordable for renters — rents surged 13.3% annually to an average of $1,507. In Calgary, the annual pace of rent growth clocked in at 8.6%, putting the average rate at $2,089. In Ottawa and Montreal, rents were up 2.5% and 8.6%, respectively, in the month.
Similar trends were observed on the roommate rent front last month, with Toronto seeing a 5% year-over-year decline for shared accommodations, putting the average at $1,269. In Vancouver, those same two metrics came in at 1% and $1,450, respectively. By comparison, roommate rents in Calgary jumped up 10%, while Edmonton, Ottawa, and Montreal saw increases of 8%, 3%, and 3% year over year.
Nonetheless, asking rents for shared accommodations managed a 9% annual uptick across the four provinces tracked for this type of rental — Ontario, British Columbia, Alberta, and Quebec — to an average of $996 per month.
Joe, I don’t see any “coming to grips” with the shortage of accommodation supply in my remaining lifetime which I estimate at 15 years. Certainly not as long as we continue to bring in millions of newcomers each year. I keep reading articles suggesting that developers are cancelling projects likely due largely to high interest rates which will certainly not be coming down significantly anytime soon as inflation has become systemic. Check out Jeff Rubin’s new book ” A Map of the New Normal”.
In fact, I am seriously thinking of turning my home into a triplex behind the Appleby GO with separate utilities services, take the $7,500 in rental income and pick a warm southern state. Ultimately, I may make my grandchildren joint owners or cash it out and give them the cash. (If I make it past their 18th birthdays!)
At some point we are going to have to come to grips with how the Landlord and Tenant Board is affecting the supply side of this equation. If not the curve will continue to trend upwards as rental costs continue to increase. While there are bad landlords, same goes for tenants. While corporate rental enterprises can weather a few bad apples mom and pop owners who are counting on the investments as part of their retirement strategy cannot. Owners who include utilities will also get hammered and will need to retrofit their facilites that are heated with natural gas as the carbon tax is increased. These owners cannot pass on those costs under the current 2.5 % increase guidelines. Affordable housing while necessary is becoming more of a pipedream in Ontario at least.