There are affordability concerns in some Canadian cities where municipalities have "statistically zero" affordable units for lower-income renters, a new report says.
Due to increasing rent prices, many low-income households in Canada are finding suitable housing unaffordable. The country's 1.5 per cent rental vacancy rate is the lowest recorded since 1988. Strong labour markets in some cities and increased population are contributing factors, the report notes.
An affordable unit costs no more than 30 per cent of the income of the household, according to the Canadian Mortgage Housing Corporation's (CMHC) 2023 rental market report, which published its cross-country analysis Wednesday morning.
CMHC broke down major municipalities across the country by census metropolitan area (CMA) and calculated how many units are affordable for the people in the bottom 20 per cent income bracket.
"Lower-income renters face the additional challenge of especially low supply and low vacancy rates for the most affordable units in Canada’s major markets," the report says.
Here are the cities with the fewest affordable units:
In 2022, just one per cent of rental stock was considered affordable for the bottom 20 per cent of earners in Vancouver.
In 2023, that was no longer the case. The city's vacancy rate for purpose-built units was 0.9 per cent, and the average rent for a two-bedroom was up by 8.5 per cent, reflecting an average price of $2,181, the report shows.
Researchers believe demand was driven by record immigration to the area and declines in homeownership affordability.
"The stock of such units is statistically zero in Vancouver, Ottawa and Toronto, and below 20 per cent elsewhere," the report reads.
Ontario's capital city had few-to-zero affordable units for lower-income earners in 2022 and 2023, the report shows.
Purpose-built rentals had a vacancy rate of 1.5 per cent and two-bedroom units cost around $1,940 per month. That was up 8.7 per cent from a year prior.
Condo apartments were even harder to find, with a vacancy rate of 0.7 per cent, costing an average of $2,862 for a two-bedroom.
"Strong population growth, a resilient labour market and high homeownership borrowing costs contributed to market tightening," the report notes.
This resulted in a "broad-based deterioration" of affordability for more renters as inflation increased.
The nation's capital had a higher vacancy rate for purpose-built rentals, but few-to-none affordable units for the lowest-income households.
In 2022 and 2023, Ottawa residents searching for affordable rents below 30 per cent of their incomes were left out of the market, the data shows. The city's vacancy rate was 2.1 per cent for an average two-bedroom unit, which cost $1,698. Condo units had a 0.4 per cent vacancy rate and cost about $2,085 for two bedrooms.
According to the report, supply did increase in Ottawa, but demand grew at the same pace. In the end, the market "remained tight."
Lower-income renters in Alberta’s two largest cities had trouble finding affordable homes, though baseline prices remained lower than in other major cities.
In 2022, five per cent of Calgary’s rental stock was affordable for the bottom 20 per cent of earners. A year later, that figure shrank to 3.1 per cent.
The municipality's purpose-built rental market had a 1.4 per cent vacancy rate for a price of $1,695 for a two-bedroom unit. Rates increased by 14.3 per cent, the report notes.
Condo apartments are a bit more expensive in Calgary, with an average price of $1,819 for a two-bedroom, and a lower vacancy rate of one per cent.
Calgary is facing the lowest vacancy rate in almost a decade, the report notes, with rates declining from 2.7 per cent to 1.4 in 2023.
Edmonton offered more affordable options for lower-income renters, but it too saw a decline.
In 2022, 13 per cent of its units were affordable for lower-income renters. In 2023 it decreased to 12.7 per cent. The city had a 2.4 per cent vacancy rate for purpose-built units, and a similar rate of 2.5 per cent for condo apartments.
Prices for each category are similar with purpose-built units that went for an average of $1,398 per month. As for condo-style units, they averaged at $1,359 for two bedrooms.
The report offers a handful of reasons why rental units are increasing in price.
High borrowing rates and home prices have decreased the capability of renters to eventually own a home, the report reads.
There is a correlation between high home prices in Vancouver and Toronto and low availability for affordable rents, data shows. In the second quarter of 2023, median home prices in those cities were 50 per cent over the median household income. In "most" major markets in Canada, demand also outpaced supply, resulting in lower affordability and tighter markets.
"For many, renting a newly turned over apartment or buying a home is significantly harder to achieve," it says. "A lower turnover rate indicates a reduced ability or willingness of households to leave a rental unit."
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