Ontarians on the Move, 2021 Edition. #8 — Rents skyrocketed across Ontario as the population of young people increased
Eighth in (what I hope) will be a series on population growth, migration, and what’s going on with Ontario’s housing market. Previous piece: #7 — An influx of young people to Ontario is creating the need for apartments and condos.
TL;DR version: Between 2010–15, the cost of renting a 2-bedroom apartment in an (unweighted) average of 43 Ontario communities rose by $36, after inflation. Between 2015–20, the average increase was $96. In Guelph, Toronto, Oshawa, and Kitchener-Cambridge-Waterloo, the 2010–15 after inflation increase was between $50–60, whereas in 2015–20 it was between $160–200. Populations grew faster than the properties to house them, causing rents to soar.
But what about the rental market?
Statistics Canada has a series for average rents for areas with a population of 10,000 and over. I decided to download data on 2-bedroom apartments for “row and apartment structures of three units and over” to see what happened to rents between 2010–15 (a period of modest population growth) and 2015–20 (a period of high population growth).
Here’s the raw data, sorted by 2010 rents.
Nominal Dollar Rents for 2-Bedroom Apartments, 43 Ontario Communities
The top communities in 2010 are an interesting mix of big cities (Toronto, Ottawa), cottage country communities (Kawartha Lakes, Huntsville), college towns (Kingston) and places proximate to Toronto (Barrie, Oshawa, and Guelph). And Woodstock, for some reason.
These are in nominal dollars. Let’s adjust for inflation, noting that there are a lot of families across the province who didn’t see their take-home incomes rise by even inflation. The Bank of Canada has inflation at 7.99% for 2010–15 and 10.06% for 2015–20. We can use these figures to put rents into real terms.
Real Dollar Rents for 2-Bedroom Apartments, 43 Ontario Communities
So how did real rents change over time? Here’s the same list, now noting changes, sorted by highest real dollar changes from 2015–20.
Some notes about the above table:
- Unweighted by community size, the average after-inflation rent increase was $36 from 2010–15 and $96 from 2015–20.
- In 2010–15, 9 communities saw real rents fall. In 2015–20 only 2 communities experienced falling real rents (Hawkesbury, Haldimand).
- 37 of 43 communities saw greater rent increases in 2015–20 than in 2010–15. Of the 6 that did not, only one is relatively proximate to Toronto (Barrie. Next closest is Haldimand.)
- In 2010, only 3 communities had average real rents (for these apartments) of over $1000. By 2020, 14 did (in real 2010 dollars). Those 14 communities experienced a real rent increase of $51 in 2010–15 and $141 in 2015–20. Those communities are a combination of big cities, cottage country locations, college towns, and cities that have become bedroom communities for Toronto.
This isn’t just limited to 2-bedroom apartments; the same holds for other sizes. I took a look at 1-bedroom units for 5 communities in Ontario, and adjusted their prices for inflation, to put everything into 2020 dollars. Here’s average rents for these units, going back to 1995:
Here are those rents, minus Toronto:
Note the big increase, starting in 2015, particularly for Oshawa. And note that this is in real dollar terms; we’ve already stripped out inflation.
In short, the population (particularly the population of adults in their 20s) grew faster, pre-COVID, than our ability (or desire) to create housing for them, causing rental prices to skyrocket. This is an affordability crisis for many Ontarians.