How did renting in Toronto get so bad?

Ontario is open for business, the housing market has gone crazy, he said, if you don't like moving, labor costs and the price of building materials have increased predominantly our homes. The supply comes from some form of investment and profits seeking more profits from each unit they own there is no doubt that the cost of living associated with Rand is becoming very serious, in fact we hear a lot of this when it comes to the rental market , we are going to continue building houses to make them affordable Financial investment in housing crack down on Ren evictions controlled rents purpose-built rents purpose-built rentals to make housing more affordable financialization zoning increasing density politicians advocates and experts use them to explain the weak points that Canadians face when it comes to housing, especially in their largest city, Toronto, so I talked to a few people and they helped me understand why these terms are so important right now the housing market has gone crazy. housing ensuring affordable housing is built affordable housing housing affordability is why we are making this video what is affordable for you may be different than what is affordable for someone else economists and experts generally consider something affordable if it costs less than 30% of households before taxes, but the reality is that people are spending more than that to keep a roof over their heads.

It's a benchmark that was set decades ago as reasonable and affordable, but we've been so unreasonable and unaffordable for so long that it's more realistic that people are trying to avoid spending half 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 make $100,000 a year for that to be considered affordable, so affordability already He feels out of reach. for many Torontonians, but here's the scary thing: It's expected to get even worse before long with the average monthly rent at $3,000 a month and after that it will be $3,500 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 just can't, so it's getting harder and harder to find a place to call home that you can actually afford, hopefully more and more people will talk about this rent control. rent control rent control there is no doubt that the cost of living associated with

renting

is becoming very serious, in fact, no respect, no rent control has been a contentious debate for years Advocates say it protects huge increases tenants developers say rent control makes it harder to build The less money you can make from a rental building, the less likely you are to build, but some experts say we need range control now more than ever .

Rent control is absolutely critical right now and don't forget the bigger picture if you have less income but your rent is going up and the price of your food is going up three times the rate of general inflation, something has to give, for which rent control becomes a necessity to make sure that we don't have more people who are basically evicted or have rents that are homeless and hungry. rent control does a lot of things it helps helps provide a level of predictability in terms of what you know what you know what your rent will be rent control also ensures that we have greater stability in our communities that we don't have people who are Conant in the process of change where once the rent becomes unaffordable they move to another community.

Here's the thing: This debate is more complicated than just rent control or no rent control. How it is applied makes a big difference to the tenants and most of the time the rent. Rent control is not a blanket policy that applies to all buildings or tenants, for example, for years rent control in Toronto only applied to buildings built before 1991 and at this time, if you have lived in your unit since before November 2018, rent control applies to you, but if you move, your landlord can charge whatever he wants for the unit, there is actually a term for this called vacancy decontrol, part of which I think vacancy control undermines rent control because it gives you the impression or the illusion that it is rent control that is causing rents to go up, this concept is really important because there is a big incentive for some landlords to pressure their tenants to leave.

One of the ways it happened is that renovation kicked out a tenant to renovate an apartment and then put him back. Back in the market for much higher rents, so you'll hear a lot about rent control, but expect a specific policy to matter here in the meantime, the lowest rents you'll find will probably be in one of these purpose-built rentals. rental apartment construction for rent purpose built rentals is exactly what it looks like a building where people rent units often managed by a company and which is different from a condo building where it is rented from an individual owner, there are some advantages to living in Purpose-built rentals are safer than

renting

from a condo owner who may kick out a tenant to sell their unit or move out.

Purpose-built rentals also tend to have fewer amenities and that makes the rent a little cheaper. We used to build a lot of upscale rentals. Back in the '60s, there was a phenomenal increase in the number of apartment buildings, but we haven't really built upscale rentals for the last 40 years, most of the new rental units come from the condo market. Many people now talk about building purpose-built rentals as a solution to bolster rental supply in places like Toronto, but the reality is that we are not building them fast enough. Building purpose-built rentals in Toronto seems to be a challenge compared to other Canadian cities where we're going to see a shortfall of like 170,000 units and that's a pretty optimistic scenario for rental development.

It's pretty clear that we have to do something to increase that level of construction and do it now, so building more is a big part of the rental conversation, but the way we build is higher density housing is also part of the issue. and soft density, medium or high density, so in housing terms, density is a measure of the number of units given in an area, it is the difference between taking a plot of land and building a single-family house on a series of trailer homes or a high-rise building with a growing population in Toronto and only a finite amount of space, some experts say we should use existing land to build as many units as possible increase density targets basically everywhere, particularly around Transit, but basically all over Central areas of the city, but you can't just build whatever you want wherever you want and that's because of a type of regulation called zoning, the zoning bylaws determine what can be built and where the zoning is. too restrictive.

What we have seen in the last 40 years. years is more regulation, it's much harder to step it up when you're outside of certain areas of the city. To build apartment buildings, some parcels of land are zoned for single-family homes only, meaning that even if a developer or owner wanted to increase density, they legally couldn't, but in early 2023 Toronto City Council changed the laws of zoning to approve three and 4 unit multiplexes throughout the city. We think this is a step in the right direction, but obviously we know we have to go further, but not everyone is happy with the zoning changes.

I've heard this term nimi, which means "not in my backyard." It turns out that many people who live on 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 from some form of investment and profit seeking financialization financialization that phenomenon where housing is increasingly seen as a vehicle for generating wealth is also called financialization and it is one thing for people to invest in a or two rental properties, but something else is beyond what's happening in Toronto, what's different about these types of entities is the scale that these entities are not acquiring.

You know, one or two units that these entities are looking to acquire at 200 to anywhere north of 5 to 800 units in a transaction that these entities are looking for. acquire units in Mass and once they have bought them, some of these investors look to make as much money as possible with these units, it is part of the business model because what they are trying to do is get more profits from each unit they own, I want I mean, it's really amazing that they have projections of how much they can charge and how much they can increase the rents for each unit in each building.

The challenge is knowing this while trying to maintain affordability. Many of these entities have legal and fiduciary responsibilities to maximize their investment returns for their shareholders, investors and stakeholders and, as a result, are not aligned on strategies to maintain affordability. I want to make it clear that this is so. Among all these large institutional investors, some institutional investors might be better than others, unfortunately experts say that the most vulnerable tenants are often the target of these types of investors. These players really focus on affordable assets because that's where they will have the highest profit margin. Who lives in affordable housing?

These are often low-income people, students, racialized communities, people with disabilities, single parents, etc., but beyond investments and wealth creation, there is another way to think about housing. We have a national housing strategy law that says that The policy of the federal government with respect to housing is that housing is a fundamental human right as understood in international law. The question we should ask ourselves is: what does that mean? Why are we in the situation we are in? that governments should engage with both the private sector and other levels of government in a way that ensures the human right to housing is met and that they are doing that.

One thing all the experts agree on and something you already know from simply living life is that we are in the midst of a housing crisis and it is affecting almost everyone, from the new Canadians arriving here to the city largest in the country and have to sleep on the streets or in the basement of a church to a growing number of homeless people, some of whom call city parks the home of the Middle East. people with incomes can barely pay their rent every month and are wondering if now is the time to give up on the city they love, at the same time we know that in Toronto there is an influx of new people coming to the city.

With 700,000 more expected by 2051, that's a lot, especially for a place that is already under pressure when it comes to housing for those who already call Toronto home and with housing prices and rents going up, it is feels like there is more pressure than ever to solve this huge affordability problem Toronto used to build a There are a lot of apartment buildings and this graph proves it: Hundreds of thousands of units were built between 1960 and 1979, but the number of new apartments began started to slow down in the mid 70s and in the late 90s that slow trickle stopped completely, but here it is.

At first there were only a few condos being built, but then many, many, so why did Toronto go from being a powerhouse from new rental developments to a sea of ​​condos and what does that mean for today's renters? The Golden Age of Toronto Apartment Buildings It was in the 1960s that demand was high thanks to the Baby Boomers, those babies are now 18,192 years old, they are moving out of their parents' homes and builders were getting an extra boost government, so almost all rental housing built in Canada from 1945 until the end of the programs in 1984 was actually subsidized, many people don't realize that we had a very, very favorable tax system, which gave significant tax advantages to rental housing developers, so basically we had an industry that was willing to buildpeople who were interested to know that the combination of a lot of demand plus government incentives meant that between 1960 and 1979 more than 220,000 rental units were built in the GTA and the supply also came from social housing, that is, housing built for renters low income.

With government funding, eventually over 300 low-cost homes will cover this area and we were building around 20,000 social housing units annually for three decades, from 1965 to about 1995, so there was plenty of supply, so if you were a tenant in the 1960s and 1970s, things were good. But in the 80s and 90s that began to change, in the mid-70s and early 80s, the tax breaks for builders disappeared and so did those modest subsidies, all during a time when it cost more to build and because life It was becoming expensive for everyone. The federal government asked the provinces to adopt rent control measures, and many of them did so basically now that rent increases have been suppressed at a time when costs are rising, so you have this mismatch between the cost of construction and income. we are going to generate in the long term we were Downstream oh and remember that those baby boomers were getting older forming families and wanted to change life in apartments for white picket fences, so demand was weakening a little, so there were higher costs and a tax-friendly environment and that was kind of the death nail in the tenant's coffin, but as rental construction was slowing, condos were picking up, there was now a market of people who wanted to own apartments, the product of condominium, even though the legislation was created in 1969.

It took a while for it to be accepted in the market and the idea of ​​buying an apartment versus buying a house that people were traditionally used to, so we didn't really see a significant growth in condo construction really until the 1990s, condo buildings took off and rental buildings stopped, but that shift didn't change much for renters, at least not right away, that's partly because in In the 1990s and early 2000s many people were becoming homeowners. They were leaving the rental market, which opened space for other tenants to enter. This offset the release of pressure on the rental market with the ability to access the home ownership market and eventually condominiums also began to enter the rental market with more investors. buy units and put them up for rent, approximately 90% of the new rental supply in the GTA comes from the condo sector.

We've been hurt a little bit by the fact that we've had so much demand from investors buying condos and renting them out in the GTA that there really hasn't been much attention paid to the fact that we haven't been building purpose-built rentals in the GTA for really 40 or 50 years to today and Toronto suddenly finds itself in dire need. of more rental buildings, so I think what we really need is simply a huge, drastic and substantial increase in the number of purpose-built rental buildings. We are projecting that rental demand in the GTA will increase by more than 300,000 units over the next 10 years.

It's pretty clear that we need to do something to increase that level of construction and do it now, so why has that changed? Why does it suddenly seem like we need more rentals in Toronto? Well, for starters, we stopped building social housing in the late 80s or early 80s. Both the federal and provincial levels of government got out of the housing business and the burden of building and maintaining the existing stock really fell on the municipalities without any revenue tools to do so other than owning a home. It is now completely out of reach for many, so in the past where there was a constant number of renters becoming homeowners, many of them staying in the rental market, it is now combined with more people moving to Toronto and the need for rentals is in full swing. -The weather is at its highest right now for the foreseeable future.

It's a terrible time if you finished a sentence for us. Renting in Toronto is a nightmare, yes a nightmare, so if Torontonians need rentals now more than ever, why aren't developers jumping on it? opportunity to capitalize well on that demand, that could be because at the moment the cost of construction is too high, so the problem can be addressed from the cost side by trying to create homes that are not so expensive but that are impossible to build. less than it cost to build and therefore you know that the minimum rents you must set have to cover the cost of operating the building, keeping the lights on, heating the units and paying the mortgage, so there is a defect In fact, rents can go down for private developers.

It only makes sense to build if they can get their money back and that means charging high rents, but what happens when most people simply can't afford those rents? Supply and demand do not work correctly. has not operated in the rental sector for many decades, the market responds to market demand, not just demand, you have to keep up with enough money, we now have a society and a city with more and more households without enough money to generate what is called the effective market demand effect effective market demand which means enough people with enough money to justify building more housing, so if supply and demand break down what can fix the rental market ?

I think the writing that has been on the wall for years is that the government needs to get back into the housing business or the government needs to provide more funding to non-profit entities and Community Land Trusts where we are building more non-profit housing. market, the government intervenes when there is a failure in the market, we did that With our health care system we fixed it so that people are not excluded from the health care system because of their income, but we have not done it with the housing system . We need public housing, affordable housing because all the buildings we're talking about.

Most people can't afford it here in this city we have 90,000 households waiting for affordable housing on a subsidized housing list that's the kind of housing we really desperately need because for two decades we haven't built any public housing, it's absolutely necessary that we let's focus on purpose-built rental housing that is affordable and the market will never build it, so the longer we wait for the market to deliver, the bigger the crisis that will happen to a city like Toronto. when you remove rent control the provincial government removed rent control I'm faced with moving where will I go? said if you don't like to move in theory rent regulation protects tenants from being charged for their apartments, but there is a key argument What is against rent control is that it discourages the construction of new rentals, along with rent controls, not a very attractive 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 built. is being built that is bad for tenants so what happens when rent control goes away? more rental buildings rise a rent control exemption the Ontario government did just that 5 years ago, but the results aren't quite what you'd expect Ontario is open for business In 2018, a newly elected provincial government wanted to give developers a reason to build rentals, so the foreign government removed some rent controls.

If you lived in a unit, your rent was still protected, but any newly built 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 would therefore naturally want build more, eliminating rent control was supposed to make all of that happen and it worked, my name is Sean Hilderbrand, I'm president of a company called Urbanation, we've been following the market for over decades, according to research by Urban Nation , when Ford eliminated rent control, the city saw a huge jump in rental proposals.

Buildings There is a large inventory of rental projects in the GTA that are proposed for development, meaning that they have submitted an application, developers have applied to build more than 990,000 new rental units. It seems like that could put a dent in Toronto's supply problem, but here's the thing, only a third. Of those applications actually got the green light and for those that got the go ahead to start building it's not exactly easy right now building in Toronto is slow and expensive, very few projects start construction in the last few quarters and this is due to the high construction costs, it is due to labor shortages, it is due to delays in approving and preparing these projects, and perhaps not surprisingly, higher interest rates mean that it costs more to build than it did a few years ago. years, developers need to obtain loans to build. these projects, so when rates go up, it also hurts the economic viability of continuing development, so there are some very real negative consequences.

A report from the Canada Mortgage and Housing Corporation in 2021 found that the costs associated with construction including everything from land to government fees, even underground parking, were too high to be worth it for many developers and that even Without rent control in place, that report found that, depending on location and size, some rental buildings could still be profitable enough to attract developers and it is true that Despite all these challenges, they are now being building more rental buildings than in the last 10 years, but don't expect this to solve Toronto's rental problems overnight, as the long time it takes between the time a purpose-built rental is proposed and When you're actually ready to move, isn't Toronto one of the slowest cities in the world to move?

Yes, I think it takes 100 months between submitting the development application and completing the project. Part of that is due to slow approvals, part of that is due to the long time it takes to build a rental building or any apartment building. 100 months to develop and build a rental building which is more than 8 years. The reality is that new construction will not be able to keep pace. With growing demand in Toronto, we have seen an increase in housing construction overall, around 40% since before 20109, both in Toronto and across the country, so planning departments are approving permits faster , builders are building homes faster. but they are still not holding up, we project that rental demand in the GTA will increase by over 300,000 units in the next 10 years if we look at the amount of supply that could arise from purpose-built rentals and also condo rentals. "We're going to see a shortfall of about 170,000 units and that's in a pretty optimistic scenario and a new building in a few years doesn't mean much to someone who needs an apartment today.

We've made a lot of progress after decades of stagnation." We are finally seeing the results of our plan, but as Canada and Ontario continue to grow at a record pace, we need to do more. Even the Premier of Ontario admits it. We reached out to the province for further comment and in a statement, the Department of Housing. The Ministry spoke of substantial progress, adding that the province remains on track with around 11,000 rental stars, a 44% increase in the number of starts over the same period last year, this is the highest level. high number of rental starts registered for this time of year.

One policy change was never going to solve Toronto's entire housing crisis and many of these problems boil down to things that provincial policy simply can't control, like the construction worker shortage, inflation and rising rates. interest, but a lot of attention has been paid to One thing about rent control that's worth asking is whether that policy ever really slowed development when Ford eliminated rent control, it had actually only been in placefor a year and a half, even with decades of no rent control, rentals were not being built. Toronto is not at the scale the city needed, so for some the benefits of range control outweigh the potential negatives, which is why I think it is very important to firmly maintain rent controls in all lines of sight, as That's part of the problem, making money is not there.

People need a place to live. What we do for each other through our governments has always been how we make sure we provide for each other and governments get a bad rap for being able to do anything right, whether it's rent control or construction, but it's like no one else is going to do it for you if we don't do it ourselves through our governments, it's not going to be done so if you think this is a crisis, you know, change it, the argument I would give back to the developers. Okay, you promised that if we deregulate you would build and you didn't, so we don't believe you when you say, if we regulate, you'll stop it because you weren't building much in the first place, so that's not the case.

There is a lot to stop and I think governments need to think more seriously about rent control. What will happen if Toronto can't control these rental prices? It's a question I first thought about 5 years ago, my rent skyrocketed to $950 a month, I thought. There is no way back then. I remember thinking that rent in Toronto was extremely expensive. This is the cheapest place I found in Toronto. I'm just having a hard time saving for any kind of future in the city. Now the average monthly cost is much worse. a one bedroom apartment in September 2023 was over $2600 it is a perfect storm of factors causing rents to rise at an unprecedented rate not too distant in the distant future says we could see rents of 33500 eventually $4000 a month when I say rising rents things are changing very quickly right now this is not slow but the question is who can afford that the average household just can't.

It made me think what is going to happen to the city, what will it become, what will it be? What they look like and perhaps most importantly who will be left, we know that rising rents are making it increasingly difficult for many people to keep a roof over their heads, but skyrocketing rents could be one of the reasons why We are seeing a shortage of workers in a number of industries you bet and it will probably be 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, hospitals will not be able to stop the terms of both medical staff and support staff, cleaners, janitorial staff and nurses who keep hospitals running, so there are effects throughout the laboratory market and in the whole economy, that really does it. affect a city's ability to function, this was the problem in places like London, England and New York City, where you know people needed employers to create key apartments where people could come and live in the apartment while they worked there and then go home on the weekends because they can'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 waste just to get to work? Come home, the most expensive houses and apartments are, of course, along the subway routes, but low-income people don't live near the subway routes, so that's the real cost: the long travel and additional expenses imposed on other people. Who can least afford to move further and further away? At what point do you give up and move? All together it turns out that 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 may not have completely returned to normal, but close by, we are still seeing an exodus from Toronto, a record number of people left Ontario in 2022 for the top reasons The skyrocketing cost of living with stagnant wages and low housing affordability is certainly understood by people struggling with housing on a sort of visceral level, like wait a second.

I've done everything I'm supposed to do. I went to school. I even got a couple of GRAs, you know? graduate degrees I have a pretty decent job and I still can't afford housing like you expect the social contract is broken that kind of migration pattern comes out of um I think it will expand and accelerate people would say we just can. I can't afford to live in this city and they won't come, so there are a lot of broad economic impacts that I think will put Toronto on the edge of a cliff, as much as it is a city with its neighborhood businesses and shops.

For me, the heartbeat of Toronto is the culture, the arts and music scene, so what if rents continue to rise? This is, oh, I'm Nicole, my name is Aurora Aurora Brown, and nowadays most people know me from Baroness Von's sketch show, which is a comedy. sketch show I helped create and starred in CBC. I've been living in Toronto and performing here for a long time. She's been making Canadians laugh for years and knows how difficult it is for artists to find affordable housing even in the best conditions. She often says that she was lucky to find an apartment in this neighborhood at a pretty good price.

Many of the people who worked in the building were artists of various kinds, musicians, photographers, makeup artists, comedians, that kind of stability at home. and rental units make it possible for people to continue living and enriching the city they are a part of, but in 2016, just as his show and professional life were taking off from nowhere, owner Lord sold the building and the new owners decreed the eviction. notices to all 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 it, they They defended, we couldn't hurt them. in their business practices there was no way we could stop them.

I don't think they ever felt embarrassed or anything, so any comforting we did was cold comforting. Ultimately, the tenants won a settlement. Brown and her family found a new apartment. with much higher rent in the same neighborhood. I know the rest of the country loves to hate it, but I think if they lived where I live they would have a great time, it's a lovely place to live when you have a good neighborhood. and I've also been very fortunate to have, you know, have a baroness, which means I can pay the rent, but it's a discouraging situation for a lot of actors in particular, like what happens to a place like Toronto if we keep going like this. way, well, I mean, look at Yorkville as you know in the '60s, Joanie Mich, that was like the place for artists and hippies and now they're the most expensive stores, so I imagine that's probably going to happen.

I think you will. You see people living in squalor, you know, piled on top of each other or you just make people leave the city and all the people coming and buying houses in the cool places. I guess it won't be cool for long unless everyone starts doing sketch shows and doing all that stuff. I don't know, let's be honest, while a lot of people are struggling right now. Toronto is also home to many wealthy people as affordability and the housing crisis worsen, let's expect to see more polarization. In 15 years we will have a whole part of the city that will be full of people without very good life opportunities and who will earn very little money.

That's David Hansy. He did a study on this very topic over a decade ago predicting exactly what we're seeing. Today, a city for the very rich and the very poor and with a disappearing middle class, no one has a crystal ball, but much of what we've heard from experts about Toronto's future simply isn't good and, To be honest, sometimes it is. I felt hopeless, but when I asked some of the smartest people who have been studying this topic for decades, is there hope? I was surprised by what I heard and while people are angry or feel desperate and want their governments to do something. something will happen because you need to keep the pressure on, get organized, if you're not organized you're not going to accomplish something, so the tenants are poorly organized, they're doing the best they can, they're getting more and more organized, uh, with these rent strikes, it's I'm.

Again I am hopeful that there is a younger generation that sees housing as their home and even maybe some young people that want to get into the housing business but aren't in it or don't want to be in it to make tons of money. who recognize that maybe there is a way to do it in a way that is more sustainable and more respectful of human rights, so what will Toronto be like if we can't control these rental prices? Who will probably stay with many people? We are very far from seeing the city empty. Toronto is a magnet and people keep coming here, so maybe it's more about how those people make it work, what kind of life you can build here, because if something doesn't work. change soon, we may continue to see a deepening divide in which only some Torontonians are thriving and many others are barely surviving.