When it comes to
housing markets, what gets the most attention is the affordability of single
detached homes particularly in large urban centres like Toronto and
Vancouver. However, the high price of
housing has boiled over into rental markets and it turns out that more
Canadians are now renting than ever before. Over half of the new households formed since
2011 are apparently renting and the greater demand is being reflected in higher
rents.
So, what are rents
like in the five major northern Ontario cities? Figures 1 and 2 plot the
monthly rent for one and two-bedroom apartments in major northern Ontario
cities from 1992 to 2017 using data from Statistics Canada. In 1992, rent for a one-bedroom was the
highest in North Bay at $510 monthly and lowest in Timmins at $451 while for a
two-bedroom it was highest in Thunder Bay at $620 and lowest in Timmins at
$565. By 2017, monthly rent for a
one-bedroom was highest in Sudbury at $848 followed by Thunder Bay at $779. For
a two-bedroom in 2017 Sudbury was the highest at $1058 followed again by
Thunder Bay at $957.
Over the period 1992
to 2017, the annual average growth rate in rents for a one-bedroom was 2.4
percent in Sudbury, 1.9 percent in Thunder Bay, 1.6 percent in North Bay, 1.8
percent in the Sault and 2.2 percent in Timmins. Over the same period, for two-bedroom
apartments, the average growth rate was 2.4 percent in Sudbury, 1.8 percent in
Thunder Bay, 1.9 percent in North Bay, 1.9 percent in the Sault and 2.1 percent
in Timmins. Indeed, these increases are pretty close to the inflation rate as measured by the CPI.
The results are
informative – rents have gone up in all northern Ontario cities - but the pace of
increase picked up after 2004. The
average annual growth rate for one-bedroom apartments in these five cities was
2 percent from 1992 to 2004 and 3 percent from 2004 to 2017. For Greater
Sudbury, rent growth was especially pronounced from 2004 to 2017 with an annual
average growth rate of 3.5 percent for both one and two-bedrooms. Thunder Bay in comparison saw average annual
growth of 2.5 percent for one-bedrooms and 2.6 percent for two-bedrooms. However, this period saw Sudbury with a
mining boom whereas Thunder Bay experienced the forest sector crisis.
The higher growth
rates in rent since 2004 coincide with the run-up in housing prices over the
same period. Even with rent controls, as
new tenants come into a rental unit, there is the opportunity to raise the rent
to reflect market conditions and the market is getting tighter. As all first
year economics students can tell you, the long-term impact of rent control
policies is to reduce the stock of units below what they would have been. As a result, with rising demand, rents have
climbed.
However, rents in
Thunder Bay and Sudbury are still quite a bit lower than Toronto based on the
numbers here. In 2017, a one-bedroom in
Toronto rents out at $1194 – 41 percent more than Sudbury and 53 percent more than
Thunder Bay. A two-bedroom in Toronto in
2017 rents out at $1403 – 33 percent more than Sudbury and 47 percent more than
Thunder Bay. According to the Winter
2018 Conference Board CMA reports, in 2017, household income per capita in
Toronto $47,548 compared to $48,742 in Greater Sudbury and $47,287 in Thunder
Bay. Given that average incomes in
Toronto are not really that much higher than either Thunder Bay or Sudbury it
stands to reason that after paying your rent you will have a lot more
disposable income left over in Thunder Bay and Sudbury relative to Toronto.
This really should be getting greater play in the economic marketing of these
two cities.