Rising Rents and Rare Availability: Canada’s Booming Rental Crisis
In 2022, there was an unprecedented increase in the supply of rental housing across the country, but demand outpaced supply growth, driving up rents to record-low levels and restricting mobility.
Between October 2021 and October 2022, 55,000 specifically designed rental units will enter the market, representing the fastest growth since 2013. Although vacancy rates fell to an all-time low of 1.9 percent throughout the year, those extra units did very little to increase the amount of rental supply that was available.
The Canada Mortgage and Housing Corporation (CMHC) lists several factors for the rise in demand for rental housing.
- Growth in immigration.
- Decreasing affordability of home ownership.
- Returning college students in significant urban centers.
The average national rent for a two-bedroom apartment was $1,258 in 2022, up 56% from the previous year and significantly more than the 28% average increase between 1990 and 2021, according to the Canada Mortgage and Housing Corporation (CMHC).
The most expensive markets in the nation are Toronto and Vancouver, where the average rent is $1,779 and $2,002, respectively.
The sudden increases in rental costs were most detrimental to renters with low incomes. Less than 20% of the rental stock is comprised of reasonably priced housing, making them difficult to find.
More tenants chose to remain in their homes as rental prices rose across the nation to avoid paying higher prices. Rental turnover rates dropped from 15% in 2021 to 13% in 2022.
Given the evidence provided by CMHC that turnover has a significant impact on rental housing prices, these numbers are not surprising. According to the company, a 2-bedroom apartment turned over to a new tenant experienced an average rent increase of about 18%; however, tenants who opted to remain in their rental properties only experienced a 26% increase.
In 2022, Montreal had the highest percentage of affordable rental units, largely because of its older and smaller buildings, larger overall rental stock, and perhaps more individual owner-landlords.
In Canadian cities, rental condominiums made up 19.3 percent of the total rental stock, with Vancouver leading the way at 42.5 percent.
While Montreal had a meager 60.7 percent, Calgary and Toronto also had high rates of condo rentals (over 30%).
At $1,930 a month, renting a two-bedroom condo was significantly more expensive than renting an apartment.