It’s all about homeowners, even when it isn’t: rental market getting squeezed
While the homebuying market continues to confuse us—is it time to buy or sell? Nobody knows!—the rental market seems to be a little more straightforward: renters are paying more, period. The Canada Mortgage and Housing Corporation released its quarterly summary of how the market is doing nationwide, and the bad news is that rental apartments are rarer and dearer than they were a year ago. Extra-bad news is that the trend is even worse in Toronto. While nationwide vacancies declined only 0.2 per cent, in Ontario 0.6 per cent, in the GTA they declined a full 1 per cent. According to the Toronto Star:
Strong demand for renting has meant a 30 per cent decrease in the number of vacant units.
“The most influential underlying force was the marked slowdown in demand for buying homes.”
Higher home prices and tighter mortgage restrictions have priced some home buyers out of the market. The recession was also tough on the youth labor market who are the most likely to rent according to the CMHC.
“The outflow of renter households into homeownership has been restrained by the increased presence of underemployment,” said the CMHC.
OK, so even when we try to focus on a story about people who don’t buy homes, it looks like homebuyers are one of the key variables at work here. This is probably another data point in favour of a strongly slowing GTA housing market, so we’ll just add that to the scales.
And why aren’t private developers putting up more apartment buildings to capitalize on higher rents? Homeownership is to blame once again: condos are simply much more lucrative than apartment buildings. Homeowners are apparently the new Stonecutters—responsible for everything, even and especially when you’re not looking for them.
National Rental Vacancy Rate Edges Lower [CMHC]