Primary rental stock in the Greater Toronto Area (GTA) saw an uptick of 2.1% or 7,175 units in 2022, “the strongest increase in recent decades,” according to a new Rental Market Report from the Canada Mortgage and Housing Corporation (CMHC). That said, rents for those units were, outlandishly, 45.4% higher than the average rent for all units, leaving calls for better affordability in the rental sector largely unanswered.
The report goes on to iterate, “newer units would only be affordable to households in the higher (fourth and fifth) income quintiles” -- those earning $70K to $130K, and $130K and over.
Taking new units out of the equation, the average rent for a two-bedroom (CMHC’s typical sample size) grew 6.5% year over year to $1,765 in 2022. Average condo rent topped that, at $2,671, as rental demand surged.
“While rental supply increased, it couldn’t offset the growth in demand,” writes CMHC. “Moreover, access to affordable supply remains a challenge for low- and middle-income renter households (the second and third income quintiles). For instance, units affordable to these households had the lowest vacancy rates in the GTA.”
According to data tables from the national housing agency, household incomes of $25K or less faced an average vacancy that was “too low to report.” And as incomes increased, so did vacancy.
A High Price to Pay for Turnover Units
While Toronto and its census subdivisions saw strong YoY rent appreciation across the board in 2022, units that turned over saw 4.5 times that, at 29%, compared to the overall annual rent growth rate of 6.5%.
“Rent increases for most units that didn’t turn over were limited to the provincial increase guideline,” notes the report, which was 1.2% in 2022.
Dana Senagama, CMHC’s Principal Market Analyst for the Greater Toronto Area and Ontario, tells STOREYS that this is the first time the agency is considering turnover unit data in its report.
“Every year, we get feedback from the industry and stakeholders in terms of what the important indicators are. This is such an instance where turnover is a key indicator, and we wanted to include that in the survey,” she says.
Senagama adds that with rent appreciation for turnovers being as elevated as it is, rental units in the GTA are being occupied for longer than they ordinarily would.
"A lot of the folks are just staying put because it’s harder to rent again. If you try to rent, you're going to have to pay that much more at turnover,” she continues. “And that just tells you just the kind of pressure we are under.”