Low and moderate-income households continue to be priced out of Canada’s private rental markets as average rents continue their relentless two-decade rise many times faster than renter household incomes, according to the latest figures released today by Canada Mortgage and Housing Corporation (CMHC), Canada’s national housing agency. Research from the Wellesley Institute and others draws a clear set of links between good quality, affordable housing and good health.
Private rental vacancy rates (the number of vacant rental units) have risen slightly in Canada, and rents have increased at the same time – defying conventional economic theory that says that increased supply should lead to lower costs in the private rental housing market. The latest private rental market survey from CMHC paints a mixed picture of the country’s private rental markets, which provide a home to 3.8 million of Canada’s 12.4 million households.
Nationally, the rental vacancy rate in Canada’s largest communities (where most of the rental housing is located) is at 2.9% – below the 3% level that is considered the minimum for a healthy private rental market. The national rental vacancy rate edged up fractionally over the past year, but it has remained below 3% since 1999.
While conventional economic theory suggests that an increase in the rental vacancy rate – which signals more vacant units in the private rental markets – should trigger a drop in rents as landlords compete for tenants, the latest CMHC report shows that rents grew by 1.8% in the past year.
Nationally, rents have increased every year since 1992 – an increase of almost 42% over 18 years. CMHC reports that over a similar period (from 1990 to 2007), renter median household incomes have been mostly stagnant – moving from $30,800 in 1990 to $31,500 in 2007.
Rapidly rising rents set against mostly stagnant renter household incomes help to explain why there has been a slight increase in the number of vacant private rental units while, at the same time, waiting lists for affordable housing across the country continue to report a strong and growing need for new affordable homes.
The Ontario Non-Profit Housing Association reported in May that there are an additional 12,382 households on local waiting lists across the province for a total of 141,635 households – an increase of 9.6% in one-year. The latest CMHC numbers report an increase in Ontario’s private rental vacancy rate from 3.3% to 3.4%. So, vacancies are up slightly in the province’s private rental markets at the same time that waiting lists have zoomed up much higher.
The CMHC reports that private market rents rose by 3% over the past year to an average of $978, suggesting that private rental markets are increasingly out of reach for low and moderate-income renter households.
Across the country, the CMHC reports a mixed picture. Vacancy rates dropped by almost half in Newfoundland and Labrador to a critically low 1.1%; and also fell in Prince Edward Island and Nova Scotia. The rental rate remained the same in New Brunswick and increased slightly in Quebec and Manitoba. The rental vacancy rate rose more significantly in Canada’s three western-most provinces of Saskatchewan, Alberta and British Columbia.
Alberta and BC defied the national trend and reported decreases in average market rents, although Alberta leads the league in the highest rents at a provincial level ($1,023).
Nineteen of Canada’s major metropolitan areas had rental vacancy rates in the crisis zone below 3%, while 17 municipalities reported rates above 3%. Winnipeg has the lowest rental vacancy rate at 1%, while St John’s NL is close behind at 1.1%. Windsor has the highest rate at 12.4%.
Vancouver reported the highest average market rents at $1,150, and Toronto was close behind at $1,134. Ottawa and Calgary also had rents above $1,000, while Victoria, Saskatoon and Oshawa all reported average rents in the $900+ range. Saguenay reported the lowest average rent at $522.
Comparing year-over-year increases, Regina topped the national league tables with an annual rent increase of a whopping 7.1%, followed by a 5.3% increase in Saskatoon. St John’s NL reported an annual increase of 5%, with Victoria reporting a 4.9% rise and Winnipeg up 4.6%. Calgary and Edmonton both reported decreases in average market rents (6.4% and 2.9% respectively), although average rents in those cities remain very high relative to renter household incomes.