The Tenant Issues Committee at the City of Toronto recently considered a new report on rental housing market conditions in Toronto. Most of the findings are not surprising. As we know, rents have been rising while vacancy rates are at their lowest levels for the past 15 years.
Asking rents higher than expected
What stands out in the report is that asking rents for the few apartments that are available for rent are well above the CMHC average rents. As a result, the report shows that many renters can only afford shared accommodations. The situation is particularly challenging for families, since apartments with more than 1 bedroom have the highest differences between asking rents and the CMHC average rents. The average asking rent for a 2 bedroom apartment was 70% above the CMHC average market rent. What this means is that renters in Toronto, who make up almost half of Ontario’s renter households, are struggling to find an affordable place to call home.
Working families priced out of the rental market
Another finding highlighted in the report is the relatively high annual income needed to afford rental housing in Toronto. For an average market rent of $1,240 to be affordable a household needs an annual income of $49,600. For an average asking monthly rent of $1,829, a household would need to have an annual income of $73,160. Meanwhile, 43% of Toronto’s renter households are making less than $40,000 a year. These families have to make daily sacrifices just to keep a roof over their heads. Many cut down necessary expenses on food, medicine, or transportation.
While Toronto has seen strong growth in new residential units annually, the report also shows that the new rental housing supply is mostly in the condo sector. The problem with the growth of condo rentals is that they are not a long-term solution to our affordable housing crisis because rents are significantly higher in condos compared to rents in purpose-built apartments and there is less security of tenure (since a tenant can be evicted if the owner wishes to occupy the unit or sell it).
More affordable purpose-built rental units?
A promising sign in this report is that we are seeing an increase in development of new purpose-built rental units. This is a good sign as long as those new developments are not limited to luxury purpose-built rentals. New luxury rentals won’t fix our affordable rental housing crisis. We need rental housing that is affordable for the many Torontonians making less than $40,000 a year.
Ontario needs to generate 6,500 units of affordable rental housing per year for the next 10 years in order to address the current shortage of affordable housing. The private sector alone will not build housing for those who cannot afford to pay Toronto’s rising rents. For the private sector, profits are what they are after. So it is the responsibility of our elected officials, at all levels of government, to commit to policies that promote the affordable rental housing we desperately need.