The impact of Covid-19 on affordable housing and the rental market in Toronto

Statistics from a CMHC article show that “a full-time job is equivalent to 150 hours per month (or 37.5 hours per week), i.e. [Central Metropolitan Areas] showing more than 150 hours implies that the average rent is not affordable for an average single earner with no other source of income, even if working full time.” Toronto showed 170.7 hours in 10/20 and 178.3 hours in 10/21 indicating a 4.45% increase in just one year with projections to continue to increase.

Hours of work required per month to maintain monthly rent at 30% of gross income for a purpose-built 2-bedroom rental apartment3

Selected CMAs

21st of October

October 20

Change (number of hours)

Vancouver

198.0

197.8

0.3

Victoria

162.6

162.8

-0.3

Edmonton

130.6

124.4

6.3

Calgary

136.7

128.5

8.2

Saskatoon

136.1

130.5

5.6

Regina

127.0

123.0

4.1

Winnipeg

164.0

159.5

4.5

hamilton

148.0

143.2

4.7

Greater Sudbury

141.8

130.0

11.9

KCW**

143.4

140.5

2.9

Peterborough

160.5

123.8

36.7

Windsor

137.8

119.2

18.6

St. Catharines–Niagara

149.4

138.5

11.0

London

154.1

139.2

14.9

kingston

156.4

154.4

1.9

Toronto

178.3

170.7

7.6

Ottawa

146.5

144.3

2.3

Gatineau

107.1

99.2

7.9

Quebec

105.6

100.5

5.1

Montreal

105.8

102.9

3.0

Halifax

162.6

150.8

11.8

Although data on average rents, occupancy rates, etc. widely disseminated and relatively easy to interpret, we found that more “qualitative” information of the type we were looking for is a little more difficult to obtain. We started by researching the situation before 2020 and realized that an important metric to measure and compare would be the rate of evictions over time.

Generally speaking, prior to the COVID-19 pandemic, our research indicated that landlord-tenant relationships in Toronto were improving (on average). For example, a study published by the Wellesley Institute showed that the total number of formal evictions in Toronto remained in a relatively stable range of 20,000 to 28,000 per year during the period from 2010 to 201812018 is at the lower end of this range.

In addition, the number of rental properties in Toronto increased considerably during this period. This is partly due to a notable increase in the construction of rental-specific housing (apartment buildings), as well as a change in the use of freehold properties (mainly condos purchased by foreign investors) from owner occupancy to tenant occupancy.

In short, while the number of evictions remained the same in the years preceding the pandemic, the rental stock in Toronto increased significantly. This means that the rate of evictions (as a percentage of total rental inventory) was actually down – significantly.

We then tried to look at those same numbers during the pandemic years (2020 and 2021), which is where things got a little messy. First of all, the Ontario the government halted residential evictions twice during the COVID-19 pandemic, greatly skewing eviction figures. Meanwhile, the number of deportation requests has skyrocketed. At one point, with so many Torontonians out of work due to COVID-19, it was estimated that up to 11% of all renter households in the city were behind on their rent.2.

It is difficult to determine the impact of these offsetting factors on the true eviction rate over the past two years. What we do know is that all of this has now resulted in a massive backlog at the Landlord Tenant Board. Combined with a major rebound in market rents in the city in recent months, this will likely lead to a sustained increase in eviction rates over the next few years.

Indeed, landlords who want to capture these market rent increases will find ways to do so, despite rent control rules and other regulatory protections for tenants. Landlords have become savvy about circumventing tenancy laws. The three most common ways to avoid rent control are all on the rise:

  1. “Personal use” – this is where the owners declare that they (or their family members) are personally moving into the property. Tenants are then required to vacate the premises and often find the property later re-rented at a much higher price.
  2. “Renovictions” – this is where landlords say they need their tenants to move out to renovate. Although the law states that a landlord who forces a tenant to move out for renovations must subsequently offer that same property to that tenant at the same rent they were paying before the renovations, few tenants are aware of this rule. , let alone do so due to the added cost of returning. More recently there has been an increase in large-scale development-related evictions (apartment buildings are being converted to condos, either through renovation or tearing down and rebuilding), compounding the problem.
  3. “Property Sale” – when a rental property is offered for sale, if the new owner intends to live in the unit, the tenant is required to vacate. This is usually a legitimate scenario (where a landlord wants to take advantage of rising house prices), but it doesn’t do much for the tenant who still has to move out and will likely have to pay much higher rent to a similar property elsewhere.

Once their “low” rent tenants are released, landlords will find a way to get market rent, or they will simply take their units off the traditional rental market and list them in alternative markets (like the more lucrative furnished rental or short-term rental). term rental markets).

More regulation and enforcement might temporarily help tenants, but in the long run, history shows us they don’t work. Ultimately, housing affordability boils down to simple economic factors – supply and demand. On the way to this “new normal”, we will have to accept our only lasting solutions to the problem of housing affordability by Toronto – we slow down migration to the city (ie decrease demand) or find ways to further encourage the development of the rental stock (ie increase supply).

The action plan described in a report written by the City of Toronto“Covid-19: Impacts and Opportunities,” includes guidance to improve eviction prevention measures and efforts to increase supply through the creation of 40,000 affordable rental and supportive housing units.

“We need to be prepared for many people who have lost their jobs and are behind on their rent to be supported to live (financially), look for work and avoid evictions from their homes. This is a top priority.” – Comment of the Municipal Consultation

While city plans are in their early stages to address and adapt to the lasting effects of Covid-19 on affordable housing, statistics show residents are choosing to live in the
suburbs as the demand for larger housing grew and working from home became more prevalent.

Would you like to know more about furnished apartments?
Visit https://www.torontofurnishedrentals.com/

1 https://www.wellesleyinstitute.com/wp-content/uploads/2020/08/Forced-Out-Evictions-Race-and-Poverty-in-Toronto-.pdf
2 https://www.wellesleyinstitute.com/wp-content/uploads/2020/08/Forced-Out-Evictions-Race-and-Poverty-in-Toronto-.pdf
3 https://www.cmhc-schl.gc.ca/en/media-newsroom/news-releases/2022/rental-markets-continue-recovery-covid-19-disruptions

SOURCESky View Suites Group Inc.

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