The stunning increase in housing–and by extension, rental–prices have been top of mind for both established households and young people looking to enter the real estate market.
We recently learned that new low-rise housing builds in the GTA are starting at $1 million and over and that prices of detached re-sale homes in the 905 have also officially hit $1 million. Since homes–even traditionally more affordables ones such as condos and towns–are incredibly expensive and going up in price almost every month, many people are choosing to rent (sometimes indefinitely).
While renting is a great option for many people, rental rates are climbing right alongside housing prices. According to data recently released by Urbanation, a firm that studies and collects information on the Toronto and GTA condo markets, condo rents in the 905 (and Brampton definitely falls under that umbrella) are up six per cent.
The data shows that renters in the general 905 area are paying about $1,739 a month (or $2.22 per square foot in a 719 sq. ft. condo). In Toronto, the same size unit costs about $1,990 a month ($2.77 per square foot).
As for Brampton in particular, recent data released by the Canada Mortgage and Housing Corporation (CMHC) indicates that Brampton has a rental apartment vacancy rate of just 1.2 per cent. The CMHC also says the average two-bedroom unit in the city costs about $1,186 per month (which is actually low compared to the rental rates typically advertised on MLS).
Escalating rental costs are a problem for many people, especially when they outpace average earnings.
According to the 2011 National Household Survey (NHS), the median household income in Brampton is $77,787 (household meaning a dwelling that typically houses more than one person–not to be confused with individual earnings).
The good news is that $77,787 is actually a 7.5 per cent increase from the 2005 median household income of $72,402. But while incomes do appear to be rising, they’re certainly not keeping pace with housing and rental prices (especially considering the fact that, according to Urbanation, condo rents just rose six per cent year-over-year in the 905).
When it comes to individuals, the NHS reports that the average worker in Brampton has an average employment income of $35,392–a decrease of 0.8 per cent from 2005. It’s also important to note that back in 2011, the average monthly payments for rental units were higher than the Ontario average. StatsCan reports that Bramptonians were paying about $1,047 a month compared to $926 in the province. Brampton residents who owned their homes were also paying $1,606 a month, higher than the Ontario average of $1,284.
With rents climbing faster than earnings, it’s safe to say some residents–especially young ones–are looking at a tough housing market that’s been profoundly affected by persistently low inventory (realtors in Toronto and the GTA have noticed an uptick in actual bidding wars over desirable rental units).
In fact, skyrocketing rental rates (in Toronto, to be fair) recently prompted a 32-year-old CBC reporter to confess that she has been forced to couch surf. Interestingly enough, Aanother recent CBC article discussed the exodus of young people from Toronto–a demographic that simply cannot afford rent in the city. According to the article, young professionals are leaving the downtown core to set up homes in west end cities such as Burlington and Hamilton because they simply cannot afford to stay in the city.
While Brampton’s rental situation isn’t quite the same as Toronto’s, it’s easy to see how someone with a before-tax salary of $35,000 might find it difficult to afford a one bedroom condo that’s listed at $1,600 a month. As of now, the only truly affordable rental suits for singles with average incomes are basement apartments (which can still be rented for under $1,000, for the most part). Unfortunately, many basement units aren’t registered (although the city and region are working to change that) and not everyone wants live in a secondary suite indefinitely.
With condos now costing GTA buyers up to $400,000, it stands to reason that investors aren’t going to rent out units (even smaller ones) for less than $1,000 a month. With high prices and growing property taxes (Brampton’s are actually higher than Toronto’s), it simply wouldn’t make sense for a landlord to price his or her unit competitively (and if he or she did, multiple offers would drive the price up anyways).
So, what happens if Brampton residents–and young professionals in particular–start looking for homes in Orangeville and Ancaster and Barrie?
Well, what’s known as a “brain drain,” for starters.
Paul Kershaw, a University of British Columbia professor who has studied the impact of high housing prices on youth, told the CBC that Toronto and the GTA should look at the Metro Vancouver Area as an example of what happens when young people cannot afford to stay in a city. Kershaw told the news outlet that the economic impact on cities is serious, as companies have a difficult time recruiting talent that isn’t there.
“Metro Vancouver is becoming a generational ghost town,” Kershaw told the CBC. “If Toronto is not careful, it is not that far off now.”
Although home and rental prices won’t decline any time soon, Brampton is working to provide more affordable housing for people in need. In fact, the city recently celebrated the opening of the new Hansen Affordable Housing Development. The building will help many members of the community, as a number of suites have been specifically set aside for seniors, domestic violence survivors and residents with disabilities. That means that 115 units will be available for other residents, but with Peel boasting a long affordable housing waiting list, getting a unit could prove difficult for many.
Fortunately for residents, new rental stock could be available as soon, as the city is set to welcome seven new condo developments over the coming years. It’s also important to remember that RioCan CEO Ed Sonshine recently announced that he’s interested in constructing a brand new commercial and residential development in the Shopper’s World area that will boast 1,500 rental units.
But while new and proposed developments could add rental stock to the city, it’s hard (if not impossible) to say that any units will be “affordable” for the average young professional or family. If prices continue to climb, prospective renters may be forced to remain in basement suites or move outside of the city.
That said, more robust rental inventory could temper rental rates, so perhaps it’s best for governments and advocacy groups to work towards developing more units for prospective renters who are being squeezed out of their home cities by dramatic cost increases that the average salary simply cannot cover.