Vancouver has the lowest vacancy rate and some of the highest rental housing costs in the country, with a recent Padmapper survey pegging the monthly cost of a one-bedroom at $1,973.
But there is hope in sight for the city’s beleaguered renters.
An RBC Economics deep dive into Canada’s largest rental markets noted that, while Vancouver rental housing supply lags well behind demand, there is a clear path for the market to equalize.
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RBC senior economist Robert Hogue writes in the report that, as of the fourth quarter of 2018, Vancouver’s vacancy rate was hovering at 1 percent, far below the 3 percent rate which is considered to be a healthy equilibrium for the market. Hogue projects that the city will need to add 11,300 rental units per year to close the gap.
The good news is that strong rental construction activity has put the city on track to close it within “a couple years” according to Hogue.
“We see plenty of room for new supply to rise so long as a large proportion (at least 40%) of newly completed condos makes its way into the rental pool,” writes the RBC economist.
“A resurgence of purpose-built rental apartment projects in the past three years has been encouraging. This set off a wave of new supply now coming to market, which should eventually stabilize rent.”
There is one caveat for a key segment of the city’s renter population that has been anxiously waiting for relief.
Vancouver, writes Hogue, has the least family-friendly rental stock of all of Canada’s largest markets. While half of purpose-built rentals in Calgary and Toronto have two or more bedrooms, only about a quarter of Vancouver rentals meet this important family-friendly threshold. It will be critical for rental supply that comes online in the future to meet these needs.
The situation may not be perfect in Vancouver, but it certainly sounds more encouraging than what Hogue projects for the Toronto rental market in the coming years.
Like Vancouver, Toronto has a sizeable rental deficit. For Toronto’s rental supply to catch up to demand, Hogue writes that net new contributions to supply would need to double. Currently, the city isn’t even close to hitting the pace of purpose-built rental and new condo construction needed to double supply contributions. The only way forward, as Hogue sees it, is a significant shift in government policy that would encourage a ramp up in construction.
Until that happens, Vancouver is on the path to a much more balanced rental market while Toronto continues to run a major rental deficit.