Bid Wars, Ruthless Viewings and Onerous Applications: Stories from Canada’s Red-hot Rental Market

Julia Belittchenko searches for rentals in Toronto’s Christie Pits neighborhood on August 13.Narisa Ladak/The balloon and the mail

Weeks into his search, Oliver South wonders how long he will have to search before he finally finds a place to live for the final year of his bachelor’s degree.

The mechanical engineering student, who attends the University of British Columbia in Vancouver, has contacted about 35 different people who have posted rooms for rent. About half don’t respond, he said. The other half makes it clear that he faces stiff competition.

One person raised the listing price by $100 a month in the middle of the conversation, according to messages South shared with The Globe and Mail. Another person, who sublet a unit rented and managed by UBC, never listed a price at all, which invited a furious bidding war for a coveted room on campus that is within walking distance of class.

Finally, the sale price reached at least $1,750 per monthmore than 80 percent higher than what the university charges the original tenant.

“I know it’s way over priced but it seems like people are willing to pay that much and it’s hard for me to say no,” the sub-lessor wrote in messages to Mr. South that he shared with The Globe and posted on Twitter. “So yeah, that’s the current offer I have if you want to top that.”

Reached for comment, UBC said in a statement that it cannot prevent students from subletting their units above the original rate, as the university is not a party to those deals. However, the university said sublease agreements must meet certain requirements and approves “very few” sublease during the academic year.

Mr. South tried to negotiate with the person to no avail. Based on other listings for similar units, he said he wouldn’t be surprised if the price went up after he pulled out.

“This is the market right now,” he said.

And it’s not just the case in Vancouver, where calls for affordable housing have echoed for years. Across Canada, renters looking for a home are struggling with a red hot market in which competition is fierce, prices seem to rise in real time, and owners, in Mr. South’s words, “hold all the cards.”

A confluence of factors is to blame for the increase in rental demand. Chief among them is rapidly rising interest rates, according to Shaun Hildebrand, president of Urbanation Inc., a Toronto-based real estate research firm. Since those rates have refrigerated house sales And he did harder to qualify for a mortgagemany would-be buyers have found themselves trapped in a rental market that is already tight.

Meanwhile, record unemployment, renewed immigration and a return to the office and classroom — all benchmarks of Canada’s recovery from COVID-19 — have further widened the renter pool after a lull in demand. rent during the first days of the pandemic.

In July, the monthly average rent in Canada had risen 10.4 percent, to $1,934, compared to the same period last year, according to a report by Rentals.ca. However, in some cities costs have increased well above the national average in the last 12 months.

In Victoria, rents for all property types averaged $2,667 in July, an increase of 27 percent from a year earlier. Hamilton, Kitchener, Toronto and London, in Ontario, and Burnaby, in BC, followed close behind, with rents up about a quarter from the previous year in each city.

Meanwhile, in Vancouver, the median rent in July was 16 percent higher than the previous year, at just under $3,118 per month, the most expensive rent, on average, in the country.

In Calgary, that figure jumped to $1,797 in July, an increase of 18 percent. That’s largely due to a strong return in international and interprovincial immigration, according to Michael Mak, a senior analyst at Canada Mortgage and Housing Corp.

And in Toronto, the median rent for all residential property types rose to $2,691 in July, up nearly 24 percent from the same month last year.

A urbanization report Last month it was found that rents in the Greater Toronto Area had risen at the fastest pace on record in the second quarter of this year. At the time, Urbanation said the GTA’s vacancy rate was 1.4 percent, down from 5 percent a year ago.

That does not surprise Julia Belittchenko. She and her partner have been looking for a new home “anywhere along a transport line” in Toronto since June. She estimates that they have contacted more than 200 places.

“It’s very, very discouraging,” said the 25-year-old, who is an academic administrator at a camp for international students.

“I’m working full time, and then […] every spare second I have, I’m doing my other full-time job of finding a place to live. I am constantly on every site searching.”

Until now, affordability and unprecedented competition have been its biggest challenges, Belittchenko said. After three different visits, within minutes, he was informed that each place had been taken away.

Owner expectations also appear to have increased, he said. In addition to providing recent pay stubs and multiple references, many landlords now require credit reports, co-signers, employer contact information, photo ID and, for college students, proof of enrollment.

The rental market is beginning to feel like a lottery, said Tessa, a Vancouver woman in her 30s. (The Globe does not identify her or use her real name so she can speak candidly about her apartment search.)

A few weeks ago he arrived at a wake with about 25 people waiting outside the place. When the crowd learned that they would be shown the apartment in small groups, some began to fight their way out.

The others exchanged war stories. A young woman carrying a laminated business card said that she had been searching for three months. When she came in for a viewing, the woman said, the list price had suddenly jumped $300.

Last week, Tessa thought she might have found a place, though she wasn’t sure she could afford it. Until she failed, she was willing to spend hundreds of dollars more per month than she had originally budgeted. Due to the impact that searching for her has had on her mental health, she felt that she could not afford to continue searching.

When could Canadian renters get some relief?

In the short term, both Hildebrand and Mak agree that a recession is the most likely way rents will go down, or at least stop rising.

However, in the long term, Canada needs significantly more rental development to bridge the gap between supply and demand. And because of the rising cost of financing, building materials and labor, it’s up to governments to introduce more incentives for purpose-built rental construction, Hildebrand said.

But Dr. Penny Gurstein, director of UBC’s Housing Research Collaborative, insists that only Correct type of offer will address the country’s housing crisis.

Much of the rental stock built today is too expensive for many renters, he said. Dr. Gurstein believes community land trusts, in which a nonprofit group owns and maintains property on behalf of a local community to provide affordable housing, could be a solution. The situation is dire and governments must innovate if they want to see meaningful progress, she said.

It has become much more difficult for young people to leave home, Dr. Gurstein noted. Mr. South, Mrs. Belittchenko, and Tessa can attest: They all currently live with their parents, despite their best efforts to move. The same goes for one of Dr. Gurstein’s close relatives.

That reality portends something much darker, he said, one that hampers not only an individual’s ability to flourish, but also the vibrancy and culture that youth bring to neighborhoods.

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