Rising rents mean Canadians are devoting a higher portion of their income to rent, leaving them cash strapped and stressed about how much they might have to pay if they’re forced to move in the months ahead.
Inflation, rising interest and mortgage rates, growing utility costs and swelling demand are among the factors combining to lead to increasingly high rental costs across Canada, experts say, a marked change from the start of the pandemic when rents fell for a time.
Until recently, Devyaani D (the name she goes by), 28, a media and communications professional who works at an IT consultancy firm in Toronto, shared a two-bedroom condo with a friend, and paid $2,250 inclusive of utilities, in North York.
Then her landlord said she needed the rental unit for personal use. Though her landlord tried to be subtle, the message was clear – ‘Leave ASAP!’
This meant Devyaani had to start house hunting for the third time since her arrival in Canada in 2019. She decided it was time for a place of her own.
“I couldn’t find anything that was within my budget. I decided to go overboard and shed a good chunk of my salary on rent as I had no choice. It was either that or me moving outside the city,” she says.
She narrowed down her search to a few studio apartments that ranged from $1,400 to $1,600. “The $1,400 rental properties went off the market soon after they were listed. I had no choice but to go for the $1,600 studio.” Those condos are now renting for $1,800, she says.
“I fear what’s going to happen next year. Another email hinting that I leave? Maybe,” she added.
Even though her lease isn’t up for another six months, she regularly checks rental listings just in case. “I wish the rental market was more accommodating towards newcomers and single occupants. It’s hard to budget wisely [with] this inflation and forever rising rental market,” she says.
Devyaani’s tale likely resonates with the millions of Canadian renters – especially those who are stuck somewhere between unaffordable rents and even less affordable home-ownership.
The average condo rents in Toronto were up by double digits annually in the second quarter, according to the 2022 Rental Market Report by the Toronto Regional Real Estate Board (TRREB). The average one-bedroom rent increased by 20.2 per cent year-over-year to $2,269. Over the same period, the average two-bedroom rent was up by 15.3 percent to $2,979. And there’s no respite in sight.
Rent spikes can be seen across Canada. According to data from Rentals.ca, the average rent for all property types across the country was $2,043 a month as of September, up 15.4 per cent annually. The market low in April 2021 was $1,676.
In Calgary, average condo and apartment rents are up 24 per cent year over year to $1,770 in September, says data from Rental.ca. Vancouver is up 29.3 per cent to $3,225. Even Halifax has seen an increase of 13.8 per cent to $2,052.
“Vancouver renters were already shelling out compared to other parts of Canada. Honestly, I was expecting the rents to go down a bit post-pandemic,” says Apoorv Kudtarkar, a Vancouver-based recruiter who is feeling the pinch of high rents and housing prices. “The opposite has happened.”
He says that in 2018 he and his partner paid $2,300 for a two-bedroom apartment in Burnaby. They decided to move closer to downtown and had to shell out $2,400 a month plus utilities for a one-bedroom apartment.
“We are expecting our parents to arrive [from India] next year and stay with us, we are searching for a bigger place but to no avail. We aren’t even in a situation to purchase a house anytime soon,” he says.
Rental market conditions are expected to tighten further in the coming months, says TRREB president Kevin Crigger.
“Higher borrowing costs may have temporarily precluded home buying for some households, but the Greater Toronto Area (GTA) population continues to grow alongside a booming regional economy. This means that an increasing number of people requiring a place to live will turn to the rental market,” he says.
But are rising interest rates and inflation the only reason for the rent hikes? Brampton-based businessman and realtor Raman Angroya, who has two rental properties in Brampton, says high-interest rates constitute only one factor behind the unaffordable rent hikes. Mr. Angroya, who came to Canada as an immigrant in 2011, says the scarcity of rental supply and the influx of newcomers, both immigrants and international students, are leading to an exponential increase in demand.
With the rise in interest rates, Mr. Angroya’s monthly mortgage payments for both his properties have gone up by an additional $1,200 each.
“A basement [apartment] in Brampton rents for $1,300 which used to be $1,000 just a year ago. I won’t mince my words here and say landlords aren’t greedy. They probably are and, let’s be honest, who wouldn’t be given the mind-boggling demand?”
The rental crisis is not only affecting major centres like Toronto or Vancouver. The domino effects can also be seen in other cities like Calgary and Edmonton.
Julius Ogunnariwo, 80, a property manager and a realtor based out of Calgary is taken aback by how the rent prices have gone up in the city. “We have seen an influx of people coming to Calgary from Eastern Canada and Vancouver,” he says.
An average two-bedroom basement apartment used to rent for $1,000 prior to the pandemic but can easily cost $1,300 now. An upper two-bedroom can cost about $1,600, up from $1,300 before, he says.
Apart from the interest rates, “a lot of people bought houses at an expensive price so naturally, they are going to charge higher rent,” says Mr. Ogunnariwo, who owns nine properties in Calgary.
Kayla Andrade, chief executive officer and founder at Ontario Landlords Watch, says potential renters are also going above and beyond to ensure they can rent the place they desire.
“I have been a landlord for 20 years and in recent years I have seen drastic changes in how competitive tenants in Toronto have become because of lack of supply. They are willing to offer money upfront, show their extraordinary credit records and do everything possible to get that accommodation,” she says.