A combination of high rents and low vacancy rates has created a "crisis" for the Vancouver region, where young people who have already been shut out of home ownership are now increasingly unable to afford rental housing, says a new report from the Vancity credit union.
"We have made an assumption that the rental market is there for people who can't afford to get into the housing market as an owner," William Azaroff, vice-president of community investment at Vancity, said in an interview ahead of the release on Thursday of the report.
"What we're saying is, 'Hmm. Not so fast. That's not true.'"
The report, titled Rent Race: The Growing Unaffordability of Rent in Metro Vancouver, points to high average rents of $1,144 per month in the Greater Vancouver region and a low vacancy rate of 0.8 per cent, as of last fall, limiting rental-housing options for younger and lower-income households. The situation is worse in the city of Vancouver, where the average rent last fall was $1,233 and the vacancy rate was 0.6 per cent.
In fact, Mr. Azaroff said, there are only two areas in the city of Vancouver, Marpole and East Hastings, that offer affordable rent – defined as being no more than 30 per cent of income – which he described as a "disturbing" reality.
"If you go to those neighbourhoods, it is more likely, though still hard, to find a place that's going to be somewhat affordable," he said. "After that, you're moving out to New West, to White Rock, to Southeast Burnaby or some of these other areas."
Renters account for more than one-third of households in Metro Vancouver and 51 per cent of residents in the city of Vancouver, according to the report.
While weekly median wages grew by 6.6 per cent in British Columbia between 2011 and 2015 – the period of time that provided data for the overall study – rents in Metro Vancouver increased at almost double that, at 11.4 per cent, the report says.
Outside Vancouver, Mr. Azaroff said there are affordable rents in areas such as Delta, Surrey, Langley City, Langley District Municipality, Maple Ridge, the Tri-Cities and Pitt Meadows, though transportation costs can diminish affordability.
"We're not spending enough time talking about the rental situation," he said, adding that the report – Vancity's first on the dynamics of rental housing – is an attempt to fuel discussion about the issue. "There's a crisis of especially millennials, but people who are not able or don't want to get into the owned-housing market being able to find a place to live anywhere near where they would like to live."
The whole situation is daunting for renters, the report says, but also has implications for the larger economy because workers may not be able to rent close to their jobs – causing strains on businesses as they seek a reliable labour force to sustain their operations. The report says renters are dispersed throughout the economy and have a higher labour participation rate than homeowners – 69.1 per cent compared with 64.9 per cent, respectively.
"While renters frequently go unnoticed in policy discussions and popular commentary about the economy, they are a key contributor to the economic fabric of Metro Vancouver," the report says.
The study did not compare the current situation in other Canadian cities, though data compiled by the Canada Mortgage and Housing Corp., where Vancity obtained data for its report, show Vancouver had among the highest rents and lowest vacancy rates in the country last fall. Toronto had an average rent of $1,206 and a vacancy rate of 1.6 per cent, while the average rent in Montreal was just $735 and the vacancy rate was 4.2 per cent.
The report prescribes a number of measures for all levels of government to consider, including policies to encourage developers to build affordable housing, possibly through tax credits, repairing deteriorating rental stock and delivering low-interest loans to spur rental development.
Mr. Azaroff said he is optimistic, suggesting there appears to be a willingness to try various options, including one-off projects to bolster the supply of rental housing. "We are seeing glimmers of hope, but if you're that young person trying to rent, there's not a lot of comfort today," he said.