How did renting in Toronto get so bad?

Ontario is open for business the real estate market has gone crazy he said if you don't like it move out labor costs and the price of construction materials have increased predominantly our housing Supply comes through some form of investment and profit seeking more profit from every single unit that they own there's no doubt that the cost of living associated with Rand is is becoming very serious indeed we hear a lot of this when it comes to the rental market we're going to continue Building Homes to make them affordable Financial investment in housing crack down on Ren evictions rent controled purpose built rentals purpose built rentals to get more affordable housing financialization zoning raise density politicians advocates and experts use them to explain the pain points Canadians are facing when it comes to housing especially in its biggest city Toronto so I spoke to a few people and they helped make sense of why these terms matter so much right now the real estate market has gone crazy housing affordability ensure that affordable housing gets built affordable housing housing affordability it's the reason why we're making this video what's affordable for you may be different than what's affordable for someone else economists and experts generally consider something affordable if it costs less than 30% of the households before tax income but the reality is people are spending more than that to put a roof over their head this was a a benchmark that was put into place decades ago as reasonable and affordable but we've been so unreasonable so unaffordable for so long that it is more realistic that people are are trying to avoid spending half of their income on housing and some are spending more than that just to be able to have a decent place to live let's look at Toronto with an average rent of just over $2,600 for a one-bedroom unit you need to earn $100,000 a year for that to be considered affordable so affordability already feels Out Of Reach for a lot of torontonians but here's the scary thing it's expected to get even worse in not so long seeing an average monthly rent of $3,000 a month and you know after that it's going to be you know $3500 a month and then eventually $4,000 a month and the question is who can who can afford these rents because um the average household simply can't so as a place to call home that you can actually afford gets harder and harder to find find expect more and more people to be talking about this rent control rent control rent controls there's no doubt that the cost of living associated with rent is becoming very serious indeed no respect no rent control it's been a contentious debate for years Advocates say it protects renters from huge increases developers say rent control makes it harder to build the less money you can make from rental building the less likely you are to build but some experts say we need rank control now more than ever rent control is absolutely critical right now and don't forget the larger pictures if you've got less income but your rent's going up and your food price is going up three times the pace of headline inflation something's got to give and so rent control becomes like a necessity to make sure we don't have more people that are basically evicted and or underhouse and hungry rent control does many things it helps to it helps to provide a level of predictability in terms of what you know what you know what your rent is going to be rent control also ensures that we have better stability in our communities that we don't have folks that are Conant in flux where once the rent becomes unaffordable they're moving to another Community here's the thing this debate is more complicated than just rent control or no rent control control how it's applied makes a huge difference to renters and most of the time rent control isn't a blanket policy that applies to every building or tenant for example for years rent control in Toronto only applied to buildings constructed before 1991 and right now if you've lived in your unit since before November 2018 rent control applies to you but if you move your landlord can charge whatever ever they want for the unit there's actually a term for this it's called vacancy decontrol part of what I I think vacancy de control does it undermines uh rent control because it gives you the it gives you the the impression or the illusion that it's rent control that's causing rents to go up this concept is really important because there's a huge incentive for some landlords to pressure their tenants out one of the ways that happened is renovation kicking a tenant out to renovate an apartment and then putting it back on the market for much higher rent so that's why you'll be hearing a lot about rent control but expect specific policy to matter here in the mean time the lowest rents you'll find are likely in one of these purpose built rentals purpose built rental purpose build rental apartments purpose-built rentals it's just what it sounds like a building where where people rent units often managed by a company and that is different from a Condo building where you rent from an individual owner there are a few pros of living in purpose built rentals it's more secure than renting from a condo owner who can kick out a tenant to sell their unit or move in purpose built rentals also tend to have less amenities and that makes rent a little bit cheaper we used to build lots of dedicated rentals back in the 60s the phenomenal increase in the number of Department buildings but we actually haven't been building dedicated rental for the last 40 years most new rental units come from the condo market now lots of people talk about building purpose-built rentals as a solution to beef up the rental supply for places like Toronto but the reality is we're not building them fast enough constructing purpose-built rentals in Toronto seems to be a challenge compared to other Canadian cities we're going to see uh a shortfall of like 170,000 units and that's under a pretty optimistic scenario for rental development it's pretty clear we need to do something to ramp up that level of construction and and do it now so building more is a big part of the conversation around rentals but how we build is also part of the issue higher density and gentle density medium or high density housing so in housing terms density is a measure of the number of units given in an area it's the difference between taking one lot of land and building one single family home a series of tow houses or a high-rise building with a growing population in Toronto and only a finite amount of space some experts say we should be using existing land to build as many units as possible raise density targets basically everywhere particularly around Transit but basically in all Central areas of the city but you can't just build build whatever you want wherever you want and that's because of a type of regulation called zoning zoning bylaws determine what you can build and where zoning is too restrictive what we've seen over the last 40 years is more regulation it's much more difficult to intensify when you're outside of certain areas of the city uh to build apartment buildings some parcels of land are zoned only for single family homes meaning even if a developer or property owner wanted to increase density they legally could not but in early 2023 Toronto City Council changed zoning laws to approve three and 4unit multiplexes across the city we think this is a step in the right direction but obviously we know we need to go further but not everyone is happy about zoning changes ever heard this term nimi it stands for not in my backyard turns out lots of people who live in single family lots don't want apartment buildings built next door now there's another piece to this rental puzzle and it has to do with how you think about housing fundamentally predominantly our housing Supply comes through some form of investment and profit seeking financialization financialization that phenomenon where housing is increasingly thought of as a vehicle for Building Wealth is also called financialization and it's one thing for individuals to invest in one or two rental properties but there's something beyond that happening in Toronto what's different about these types of entity is the scale these entities are not acquiring you know one or two units these entities are looking to acquire in 200 to anywhere north of 5 to 800 units in one transaction these entities are looking to acquire units on Mass and once they've bought them some of these investors are looking to make as much money as they can off of these units it is part of the business model because what they're trying to do is squeeze more profit from every single unit that they own I mean it's really quite incredible they have projections of how much they can charge and how much they can increase the rents for every unit in every building the challenge is is that you know while we're trying to maintain affordability a lot of these entities have a legal and fiduciary responsibilities to maximize the Returns on their investment for their unit holders investors and shareholders and as a result they're not um aligned with um the strategies of maintaining affordability I want to be clear this isn't all of these big institutional investors some institutional investors might be better than others unfortunately experts say the most vulnerable tenants are often targeted by these types of investors these actors really hone in on affordable assets because that's where they will have the greatest um margin for profits who is it that lives in affordable housing it tends to be low income people students racialized communities persons with disabilities single parents Etc but beyond Investments and Building Wealth there is another way to think about housing we have a National Housing strategy act and it says that the federal government's policy with respect to housing is that housing is a fundamental human right as understood in international law the question that we should be asking is well what does that mean then why are we in the situation we're in and doesn't that mean that governments should be engaging with both the private sector and other levels of government in a way that make sure the human right to housing is realized and are they doing that one thing all the experts agree on and something you already know from just living life is that we're in the midst of a housing crisis and it's hitting almost everyone from new Canadians arriving here in the country's biggest city having to sleep in the street or in church basement to a growing number of unhoused people some calling city parks home to Middle income earners barely able to make rent every month wondering if now is the time to give up on the city they love at the same time we know in Toronto there is a flow of new people coming into the city 700,000 more are expected by 2051 that's a lot especially for a place already under pressure when when it comes to housing for those who already call Toronto home and with home and rental prices only going up it feels like there's more pressure than ever to crack this enormous issue of [Music] affordability Toronto used to build a lot of apartment buildings and this chart proves it hundreds of thousands of units were constructed between 1960 and 1979 but the number of new apartments began to slow down in the mid 70s and by the late '90s that slow trickle came to a grinding halt but here's what was being built condos at first only a few but then lots and lots and lots of them so why did Toronto go from a Powerhouse of new rental development to a sea of Condominiums and what does that mean for renters [Music] today Toronto's Golden Era of apartment buildings was the 1960s demand was high thanks to Baby Boomers those babies are now 18 192 they're leaving the parents' home and Builders were getting extra encouragement from the government so almost all rental housing built in Canada from 1945 to the end of the programs in 1984 actually was subsidized lots of people don't realize that we had a very very favorable tax system uh that gave significant um uh tax advantages to developers of rental housing um and uh so you basically had an industry that was Keen to build uh people that were Keen to to you know providing the demand that combination of lots of of demand plus government incentives meant that between 1960 and 1979 more than 220,000 rental units were built in the GTA plus Supply was also coming from social housing now that's housing built for lowincome renters with Government funding eventually over 300 lowcost homes will cover this area and we were building the about 20,000 social housing units annually for three decades 1965 to roughly 1995 so that was a lot of Supply so if you were a renter in the 1960s and70s things were [Music] good but in the 80s and 90s that started to change in the mid 7s and early 80s tax breaks for Builders went away and so so did those modest subsidies all during a time when it was costing more to build and because life was getting expensive for everyone the federal government asked provinces to adopt rent control measures which many of them did so basically now you've supressed the increase in rents at a time when costs are going up so you kind of get this mismatch between the cost of building and the revenues you're going to generate in the long run we were Downstream oh and remember those baby boomers they were getting older starting families and they wanted to trade apartment living for white picket fences so you had a bit weakening demand so you had higher cost and favorable environment for taxes and that was kind of the death nail in the in the rentler coffin but while rental construction was slowing down condos were picking up now there was a market of people who wanted to own Apartments the condo product even though the legislation was created in 1969 it took a while for it s be accepted in the marketplace and the idea of you know buying an apartment versus buying a house which people had traditionally been used to so we really didn't sort of see a significant growth in condominium construction really until the 1990s condo buildings took off and Rental building trickled to a halt but that switch it didn't change much for renters at least not right away that's in part because in the '90s and early 2000s lots of people were becoming homeowners they were leaving the rental market which made space for other renters to come in we had this offsetting you release of pressure on the rental market by ability to access the home ownership market and eventually condos also started to feed into the rental market too with more investors buying units and putting them up for rent about 90% of new Rental Supply in the GTA comes from the condo sector we've been kind of spoiled by the fact that we've had so much demand from investors buying condos and renting them out in the GTA that there wasn't really a whole lot of attention paid to the fact that we haven't been building purpose-built rentals in the GTA for for for really 40 or 50 years fast forward to today and Toronto is suddenly in dire need of more rental buildings so I think what we really need is just the dramatic drastic substantial huge increase in purpose built rental being constructed we're projecting rental demand in the GTA to increase by over 300,000 units in the next 10 years it's pretty clear we need to do something to ramp up that level of construction and and do it now so why has that changed why does it all of a sudden feel like we need more rentals in Toronto well for one we stopped building social housing in the late ' 80s um early 9s both the federal and provential levels of government got out of the housing business and where this you know burden of uh building and maintaining the existing stock really sort of fell on municipalities without any you know Revenue tools to actually to do that also owning a home is now completely out of reach for many so in the past where you would have a steady number of renters becoming homeowners more of them are staying in the rental market now combine that with more people moving to Toronto and the need for rentals is at an all-time high right now for the foreseeable future it's it's a terrible moment if you were to finish a sentence for us renting in Toronto is a nightmare yeah a nightmare so if torontonians need rentals now more than ever how come developers aren't jumping at the chance to capitalize on that demand well that could be because right now the cost to build is too high so you can address the problem on on the on the cost Side by trying to create housing that's that's not as expensive but it's impossible to to build for less than what it cost to build and therefore you know your minimum rents that you have to set have have to cover the cost of operating the building keeping the lights on heating the units and paying the mortgage so there is a you know a flaw to which rents can actually come down for private developers it only makes sense to build if they can make their money back and that means charging High rents but what happens when most people just can't afford those rents the supply and demand isn't operating properly it hasn't operated on the rental side for many decades the market responds to what market demand not just Demand right it has to be keep up with enough money we now have a society and a city with more and more households without enough money to generate what's called effective market demand effect effective market demand that means enough people with enough money to justify building more housing so if supply and demand is broken what can fix the rental market I think the writing has been on the wall for years and that is that the government needs to get back into the housing business or the government needs to you know provide greater funding to nonprofit um entities and Community Land Trust to where um we're building more non-market housing the government steps in when there's a market failure we did that with our health care System we sorted that one out so that people are not excluded from the Health Care system because of income but we haven't done that for the housing system we need public housing affordable housing because all of the building that we are talking about most a lot of people can't afford it right here in this city we have 90,000 household waiting for affordable housing on a subsidized housing list those are the kind of housing we really need desperately because for two decades we haven't built any public housing we absolutely need to focus on rental purpose-built rental housing that is Affordable and the market will never build that so the longer we wait for the market to deliver the more of a crisis this is going to be [Music] what happens to a city like Toronto when you take away rent control provincial government wiped out rent control I'm faced to move where will I go he said if you don't like it move out in theory regulating rent protects tenants from being priced out of their Apartments but one key argument against rent control is that it discourages new rentals from being built coupled with rent controls it's not a very appealing picture if developers don't think they can make enough money from a rental building then they won't build it if new rentals aren't being built that's bad for renters so what happens when rent control goes away do more rental buildings go up a rent control exemption Ontario's government did just that 5 years ago but the results they're not exactly what you'd expect Ontario is open for business back in 2018 a newly elected provincial government wanted to give developers a reason to build rentals so the forign government rolled back some rent controls if you lived in a unit your rent was still protected but any newly built units or newly converted units would have zero rent control regulations at the time the government said this would help create market-based incentives for Supply growth meaning developers could make more money from rentals and therefore would naturally want to build more of them taking away rent control was supposed to make all of that happen and it worked sort of my name is Sean hilderbrand I'm president of a company called urbanation we've been tracking the market for for over decades now according to Urban nation's research when Ford took away rent control the city saw a huge jump in proposed rental buildings there's a large inventory of rental projects in the GTA that are proposed for development meaning they have submitted an application developers applied to build more than 990,000 new rental units sounds like that could put a dent in Toronto supply problem right but here's the thing only onethird of those applications actually got the green light and for those that did get the go-ahead to start building construction isn't exactly easy right now building in Toronto is slow and expensive very few projects start construction over the last number of quarters and this is due to high construction costs it's due to labor shortages it's due to uh approval delays and getting these projects shovel ready and perhaps not surprisingly higher interest rates means it cost more to build than it did a few years ago developers need to take out loans to build these uh projects so when rates rise it hurts the economic viability of of of proceeding with development as well so there's some very real negative uh consequences a report by the Canada mortgage and housing Corporation in 2021 found that costs associated with building including everything from land to government charges even underground parking were just too high to make it worthwhile for many developers and that's even without rent control in place that report found that depending on the location and size some rental buildings could still be profitable enough to attract developers and it is true that in spite of all these challenges more rental buildings are going up now than in the last 10 years but don't expect it to solve Toronto's rental problems overnight the stering length of time it takes between when a purpose built rental is proposed and then it actually being like ready to move into isn't Toronto one of the slowest cities in the world for getting it done yeah it's uh I think it's 100 months between development application submission and and and actually having the project completed um part of that is is due to slow approvals part of that is due to the lengthy time it takes to build a a rental building or any apartment building 100 months to develop and build a rental building that's more than 8 years the reality is that new builds won't be able to keep Pace with the surging demand in Toronto you we have seen you know an increase in in housing construction generally about 40% increase from uh pre 20109 both in Toronto and across the country so the planning departments are ex approving permits faster the builders are building homes faster um but they're still not keeping we're projecting rental demand in the GTA um to increase by over 300,000 units in the next 10 years if you look at the amount of Supply uh that could come online from purpose build rentals and also condo rentals we're going to see a shortfall of like 170,000 units and that's under a pretty optimistic scenario and a new building years from now doesn't mean much to someone who needs an apartment today we've made so much progress after Decades of stagnation we're finally seeing the results of our plan but as Canada and Ontario continues to grow at a record Pace we need to do more we need to do more even Ontario's Premier admits it we reached out to the province for further comment and in a statement the housing Ministry talked about substantial progress adding the province is quote staying on track with around 11,000 rental Stars a 44% increase on the number of starts from the same period last year this is the highest level of rental starts on record for this time of the year so one policy change was never going to fix Toronto's entire housing crisis and a lot of these issues come down to things that provincial policy just can't control like a shortage of construction workers inflation and interest rates going up but there's been a lot of focus on this one thing rent control and it's worth asking was that policy ever really holding back development when Ford rolled back rent control it really had only been in place for a year and a half even with Decades of no rent control rentals weren't getting built in Toronto not on the scale the city needed so for some the benefits of rank control outweigh the potential negatives so I think it's really important to keep rent controls firmly in every line of sight that that is part of the issue making money isn't all there is people need a place to live what we do for one another through our governments has always been the way we make sure to provide for one another and governments have got a bad rap at being able to do anything right whether it's rent control or building but it's like nobody else is going to do it for you if we don't do it for ourselves through our governments it's not going to get done so if you think this is a crisis you know change it the argument I would put back to the developers is well you promised if we deregulate you would build and you didn't so we don't believe you when you say uh if we regulate you'll stop um because you weren't doing a lot building in the first place so it's not much to stop and I think governments do need to to think more seriously about rent [Music] control what's going to happen if Toronto can't get these rent prices under control it's a question I first thought about 5 years ago my rent skyrocketed $950 a month I thought there's no way back then I remember thinking rent in Toronto was extremely expensive this is the cheapest place I found in Toronto I'm just having a hard time saving up for any kind of future in the city now it's way worse the average monthly cost for a one-bedroom apartment in September 2023 was more than $2600 it's a perfect storm of factors leading rents to rise at an unprecedented speed not so far off in the distant future he says we could see rents of 33500 eventually $4,000 a month when I say soaring rents things are changing very fast right now this isn't you know a slow bur the question is who can afford that the average household just can't it got me thinking what's going to happen to the city what will it turn into what will it look like and perhaps most importantly who will be [Music] left we know Rising rents are making it increasingly difficult for lots of people to keep a roof over their heads but could skyrocketing rent be one of the reasons why we're seeing a shortage of workers in a number of Industries you bet and it'll likely only get harder to recruit people to work in Toronto if they can't afford to live in Toronto key workers and essential workers paramedics police fire teachers and nurses if they can't afford to live in Toronto the hospitals won't be able to stop terms of both medical staff and support staff the cleaners and the the custodial staff and the the orderlies that keep hospitals going so there are effects right across the lab market and across the economy uh that really do affect uh the capacity of a city uh to function this was the problem in places like London England and New York City where you know people needed employers needed to create um key Apartments where people could come and live in the apartment while they were working there and then go home on the weekends because they couldn't afford the time to commute people won't move to the city if they can't live close to work so how many hours a day are people willing to lose just to get to work and come back home the most expensive houses and and apartments are of course along the subway routes but low-income people don't live anywhere near the subway routes so that that's the real cost is the uh long commutes and extra expenses imposed on on other people who can least afford it moving further and further away at what point do you just give up and move Al together turns out many people are already doing just that we saw people leave the city during the pandemic when working from home became a thing while life is maybe not fully back to normal but close we're still seeing an exodus from Toronto a record number of people left Ontario in 2022 to the top reasons The Soaring cost of living stagnant wages and low housing affordability certainly people struggling with housing understand it on a kind of visceral level right like wait a second uh I've done everything I'm supposed to do I I went to school I even got a couple of GRA you know graduate degrees I have a pretty decent job and I still can't afford housing like wait the social contract is broken that that sort of pattern of migration out of to um I think will will will expand and accelerate people would say we just simply can't afford to live in this city and they won't come so there are a whole bunch of broad economic impacts that I think that will put uh Toronto on the edge of a cliff as much as a city is about its neighborhood businesses and shops to me the heartbeat of Toronto is the culture the Arts and Music Scene so what happens to that if rents keep [Music] Rising this is oh it's Nicole my name is Aurora Aurora Brown and uh most people these days know me from baroness Von sketch show which is a comedy sketch show that I helped create and star in on CBC I've been living in Toronto and Performing here for a really long time she's been making Canadians laugh for years and she knows how hard it is for artists to find affordable housing even at the best of times she says she was lucky to find an apartment in this neighborhood at a pretty good great a lot of the people who worked in the building were artists of various kinds U musicians photographers um makeup artists uh sketch comedians that kind of stability of Home homing and rental units makes it possible for people to keep living in and enriching the city that they're part of but in 2016 just as her show and professional life were taking off out of nowhere the landlord Lord sold the building the new owners handed out eviction notices to all the tenants they eventually gutted the building before putting the units back on the market as Luxury Rentals but Brown and another tenant did something not many people necessarily have the resources time or energy to do they fought back we couldn't hurt them in in their business practices in any way we couldn't stop them I don't think they ever felt shame or anything like that so any kind of Comfort we did was cold comfort eventually the tenants won a settlement Brown and her family found a new apartment at a much higher rent in the same neighborhood I know the rest of the country loves to hate on it but I think if they lived where I live they would have a really good time it is a lovely place to live when you have a good neighborhood and I've also been really fortunate to have you know had baroness means I can pay rent um but it's it's a grim situation out there for a lot of actors in particular like what happen happens to a place like Toronto if we keep going down this path well I mean look at Yorkville like you know in the 60s Joanie Mich like that was like the place for artists and hippies and now it's like the most expensive stores so I would imagine that's probably going to happen I think you're going to either see people living in squalor in you know stacked on top of each other or you just have people leave the city and all the people who are coming in and buying houses in the cool places I I guess it just won't be cool for very long unless they all start putting on sketch shows and doing all that stuff I don't know let's be honest while many people are struggling right now Toronto is also home to a lot of rich people as affordability and the housing crisis gets worse expect to see more polarization 15 years from now we have a whole part of the city that uh is full of people without very good life opportunities earning very little money that's David hansy he did a study on this very topic more than a decade ago predicting exactly what we're seeing today a city for the very rich and the very poor and a disappearing middle class no one has a crystal ball but much of what we've heard from the experts about Toronto's future just isn't good and I'll be honest at times it felt hopeless but when I ask some of the smartest people who've been studying this issue some of them for decades is there hope I was surprised by what I heard and so long as people are angry or feel hopeless and want their governments to do something something will happen because you need to keep the pressure up organize if you're not organized you're not going to achieve something so tenants are poorly organized they do their best they're becoming more and more organized uh with these rent strikes I am again hopeful that the that there's a younger generation out there who views housing as home and even maybe some young folks who want to get into the business of housing but aren't in it or don't want to be in it to make Oodles of money who kind of recognize that maybe there's a way to do it in a more sustainable way in a more human rights friendly way so what will Toronto look like if we can't get these rent prices under control who will be left probably lots of people we're a long way from seeing the city hollow out Toronto is a magnet and people won't stop coming here so maybe it's more about how those people make it work what kind of a life can you build here because if something doesn't change soon we may continue to see a deepening divide where only some torontonians are thriving and many others are just barely [Music] surviving

Channel: CBC News

Views: 577,085

Keywords: renting, Toronto, unaffordable, cbc news, rent, rental market, issues, bad, future, crisis, expert, supply, demand, affordability, housing, home, inflation, city, stock, apartments, buildings, condos, canada, housing crisis

Id: K61M7EE62_s

Length: 40min 29sec (2429 seconds)

Published: Wed Oct 11 2023