Affordable rental housing is scarcer than ever in Canada, and one expert says that the COVID-19 pandemic is in large part to blame for ‘spreading’ the affordability crisis to smaller, outskirt markets.
Canada Mortgage and Housing Corporation’s Mathieu Laberge writes that the rental demand that was once heavily concentrated in major markets like Toronto and Vancouver began to spill out of those markets during the height of the pandemic.
The pandemic “enabled people to work remotely, which opened avenues for improving their housing situation,” he says.
“For example, workers who were able to work remotely and found housing in two of Canada’s largest cities’ too expensive, started looking in other areas and, in many cases, moved. This shift brought increased demand in housing markets outside of large urban centres, in markets that had been somewhat insulated from the affordability crisis.”
Although Laberge acknowledges that deteriorating rental housing affordability can’t be chalked up to a singular factor, he also points to data from CMHC that shows that affordability began to worsen in Montreal, Ottawa-Gatineau, and other smaller urban centres, during the pandemic.
“The pandemic that sparked increased geographical mobility for many workers eventually led to social immobility,” he says. “It did so by increasing demand for housing in areas that were not ready for such a large influx of new residents.”
Laberge then points to CMHC’s latest rental market report, released at the end of last month, noting that it evidences this idea of “social immobility” on several counts. More specifically, the data shows that many Canadians are opting to stick with their current rental accommodations rather than move, with turnover rates dropping from 13.6% in 2022 to 12.5% in 2023.
“More Canadians feel they can’t afford to move to a new place, or simply are not willing or able to do so,” he points out.
With all of that said, Laberge says that there are some “encouraging signs.” For one, there were a record number of housing starts in both 2021 and 2022, and though starts were down in 2023, they remain “well above any average of the past 30 years.”
He adds that there has been a “structural shift” over the past decade with apartments accounting for a larger share of total housing starts.
“Purpose-built rentals, as a proportion of all starts, have dramatically increased, from 14% in 2013 to 36% in 2023. Though demand still outpaces supply in the rental market, builders are reacting to tight market conditions,” he says.
“This is encouraging, but collectively, we must acknowledge a key point: new rental supply is not necessarily affordable when it is ready for occupancy. It may take several years before new supply results in higher affordability.”
By and large, Laberge says that Canadians need to actively rethink how they “envision” housing.
“In many other major markets, households, and not only students, share a housing unit to make ends meet. This is a well-documented phenomenon in New York City and London,” he notes. “Many Canadians lack a place to call home or can't afford one without sacrificing essential needs. Sharing an apartment with friends, family, or through organized means could provide an opportunity for them to improve their housing conditions.”
Laberge also floats the idea of converting commercial spaces into residential units with shared kitchens and bathrooms as an alternative to constructing residential buildings from scratch.
“A change in thinking in how some of our housing amenities are used could make conversions more viable,” he says. “While some may find this solution challenging to conceive, compromises in housing needs versus wants may be necessary. The idea here is not to reduce anyone’s current living standards, but what may come as a sacrifice to some, may very well be a sought-after improvement for others.”
