An increasing number of Canadians are being priced out of private rental housing. The latest survey of the private rental market by Canada Mortgage and Housing Corporation (released this morning) shows that nation-wide, the private market rental vacancy rate edged up slightly. While some argue that an increase in vacancies means more choice for renters, and puts pressure on landlords to offer more affordable rents, the same survey shows that average private market rents jumped 2.7% in the past year – more than seven times faster than the rate of inflation. The tiny increase in the number of vacant private rental units provides cold comfort to the hundreds of thousands of Canadians on affordable housing waiting lists (facing a wait of 15 years or more in some communities) since they simply cannot afford the rents that private landlords are charging. The latest numbers underline the danger of relying on vacancy rates in the private rental market as a reliable indicator of healthy and affordable housing choices for Canadians.
Renter household incomes have been largely stagnant, or declining, in the past two decades, which means more renters are being squeezed financially and, some are being squeezed right out of the private rental market. From 1992 to 2006, the average private market rent jumped 33% to $755 nationally, according to CMHC (faster than the rate of inflation). Over that same time, the median renter household income was basically stagnant at $29,700. Using the standard affordability calculation, those households could afford to pay $743 monthly. For low and moderate income renter households, well below the median, the steady upward climb in private market rents means less money for other necessities, such as food, medicine, transportation, child care and clothing. Many face economic eviction as they cannot pay the rent bill.
From 2006 to 2009, rents have increased almost 10% nationally – more than double the rate of inflation, according to the Bank of Canada. Renters are falling farther behind on the key measure that matters: the cost of housing. A slight uptick in the number of vacant units doesn’t mean much when the rent for those units is financially out of reach. Policy-makers might be tempted to view the slight increase in vacancies in the private rental market as a sign that a new supply of affordable homes is not required, but the numbers actually suggest that the existing private rental market is not meeting the housing needs of low and moderate-income Canadians. Today’s numbers demonstrate that a comprehensive national housing plan that includes both supply and affordability funding and programs, is urgently required.
The detailed numbers from CMHC show that while the nation-wide rental vacancy number edged up very slightly, the provinces were evenly split – with five reporting an increase in rental vacancies in the private sector, and five reporting a decrease. Major metropolitan areas also reported a split picture on the vacancy side – 19 reported an increase in vacancies, while 16 reported a drop.
Across the board, however, at the national level, in every province and in virtually every municipality, private market rents are up – even in those that reported an increase in vacancy rates. For instance, in the Quebec side of Ottawa-Gatineau, the private rental vacancy rate was cut in half – falling from 4.2% to 2% and rents increased 2.4%. Across the river in the Ontario side of Ottawa-Gatineau, the private rental vacancy rate rose to 2.7%, but rents increased almost 4%. Whether vacancy rates go up or down, rents in the private rental market are inexorably rising, and more renter households are struggling to pay their landlord.
The federal government’s Affordable Housing Initiative, which has recently been extended for five years, uses private market rents as a benchmark to determine affordability. In the past month, the federal government has announced a new round of bilateral housing deals with seven provinces and the three territories (to date) that continue to use private rents to determine affordability. Today’s CMHC numbers show that the private rental market is increasingly inaccessible to low, moderate and middle-income Canadians.