Toronto Rental Cost (& AirBnB) Issues

[Admiral Beez]

Beware the unintended consequences: The flip side of tenant rights and rent control legislation which is clearly needed, is that if you tighten up too much you actually take away the capacity of Landlords and hence the rental housing system to be flexible. In the absence of flexibility you diminish the housing options available to renters.

Agreed. The city and province need to understand that owning property for rent is a business, including those folks who own one or two units in the city. Make it too much of a PITA and the small landlords will walk away.

 

[jje1000]

Interesting statistics:

Around 64% of all AirBnb listings (around 12,374 listings/19255 total) are for the entire unit/house, rather than a single room. If a good proportion of that gets returned to the rental market post-regulation, that's a decent amount of supply.

http://insideairbnb.com/toronto/?ne...RecentReviews=false&filterMultiListings=false

Agreed. The city and province need to understand that owning property for rent is a business, including those folks who own one or two units in the city. Make it too much of a PITA and the small landlords will walk away.

What do you think about Ford's planned changes to rent control and his allowing easier evictions? I wonder if this + AirBnb restrictions (no easy route out) might help ease supply a bit?


An article that talks about the double-edged sword this might be:
https://www.thespec.com/news-story/...s-being-unduly-turfed-depends-on-who-you-ask/

 

[jje1000]

On the supply side of things...

Rental demand leading to ‘alarming shortage’ of up to 10,000 units a year, landlord group says

An Ontario landlords’ association wants the province to test new zoning rules in areas around transit, declining strip malls and underused industrial land to encourage the development of more purpose-built apartments.

It would be a start in stemming a deepening rental crisis that could see Ontario short of up to 100,000 units in another decade.

Tony Irwin, CEO of the Federation of Rental-housing Providers of Ontario (FRPO), said he’s not arguing for greater density in established neighbourhoods. But approval times, neighbourhood opposition, development charges and other government fees are adding costs that make rental development less viable.

One solution would be to allow builders to save on the cost of land by intensifying “unicorn sites” — properties with existing rental buildings that have room for more, he told an Empire Club lunch on Tuesday. Those sites “represent untapped potential to put new units on the market without any cost to buy new land,” he said.

An updated study for the association by market research firm Urbanation shows that Ontario needs to build 7,000 to 10,000 new rental units a year. In 2017, that number was predicted to be 6,000. Even though rental housing development is up, it is far outstripped by the demand driven by a booming population, high employment and declining home ownership, says Urbanation’s report.

The supply of purpose-built apartments increased by 1 per cent or 6,800 units last year. But that was still less than the 8,500 that came on-stream in 2017.

Given Ontario’s 16-year-low vacancy rates — in the city of Toronto, they were around 1 per cent last year — tenants are staying in their apartments longer. That means landlords lose their only opportunity to raise rents to market levels when someone moves out. Some landlords that used to see 25 to 30 per cent turnover annually are now reporting rates closer to 10 per cent, Irwin said.

“This, coupled with rising pressure from organized groups fighting above-legal guideline rent increases, has made the climate for operating rental housing very challenging. That climate informs investment decisions,” he said.

Development rules favour condos, said Toronto councillor Ana Bailao, council’s housing advocate, who attended Irwin’s speech.

“We need to give priority for rental in this city. We know when a piece of land comes up for development, the economics always favour condo. As we develop policy at a city and provincial level we need to take those things into consideration and have more of a level playing field,” she said.

Rental demand leading to ‘alarming shortage’ of up to 10,000 units a year, landlord group says

An updated study for the Federation of Rental-housing Providers of Ontario shows that Ontario needs to build 7,000 to 10,000 new rental units a year. ...

www.thestar.com

 

[jje1000]

Not new news, but still an ongoing problem- can't believe that it hasn't been resolved yet.

Rise of ghost hotels casts pall over Toronto rental market

According to a recent report from Fairbnb, if Toronto’s short-term rental regulations restricting entire home listings were enforced, up to 6,500 non-compliant listings for entire homes could be added to Toronto’s long-term rental market immediately. The total number of Toronto Airbnb listings increased by almost a quarter in 2018, the coalition says.

Toronto’s vacancy rate is 1.1 per cent, according to the Canada Mortgage and Housing Corporation’s Rental Market Survey.

“A healthy rate is 3 per cent,” says Joe Cressy, city councillor for Spadina-Fort York, the ward with the most ghost hotels in Toronto. “To create a truly affordable and livable city, we must take out the investor-driven ghost hotels … Airbnb can be part of the solution or part of the problem. Currently they’re part of the problem.”

Rise of ghost hotels casts pall over Toronto rental market

Thousands of rental units being filled with tourists instead of Torontonians amid growth of short-term rental market.

www.thestar.com

 

[christiesplits]

Murder at a Stouffville house party last night was an Airbnb:

https://www.cbc.ca/news/canada/toronto/whitchurch-stouffville-fatal-shooting-bloomington-ninth-1.5121288

And another Airbnb murder in York Region last year:

https://www.cbc.ca/news/canada/toronto/fatal-vaughan-shooting-1.4661972

 

[jje1000]

Another interesting note:

Digging into the History of Housing Affordability: John van Nostrand

John van Nostrand, Founding Principal of SvN, was a presenter in our event this week, Innovations in Housing Affordability. A planner, architect and developer of many decades, he is highly aware of…

www.citybuildinginstitute.ca

 

[TrickyRicky]

If you believe these numbers rental demand and price escalation will continue unabated.

To be honest I have a hard time stomaching setting rental rates on vacant units even at the lowest end of market comparables... and I’m the Landlord

Centre for Urban Research and Land Development

 

[rbt]

If you believe these numbers rental demand and price escalation will continue unabated.

To be honest I have a hard time stomaching setting rental rates on vacant units even at the lowest end of market comparables... and I’m the Landlord

Centre for Urban Research and Land Development

Some neighbourhoods, such as Danforth, probably have too much protection from intensification. I'm not sure how you get from where they are today to something that allows as-of-right 8x FAR within 500m (15X within 100m) of existing subway stations but I think we'll need to explore it at some point.

It should be the default that any station has default zoning well above that of a single detached neighbourhood.

Midrise and Ontario fire code don't particularly mix well either, although the midrise wood construction improves the cost effectiveness of midrise a bunch.

 

[jje1000]

Definitely could be a problem that could harm economic viability especially if the city grows too fast. I think one of the leading issues facing young professionals living in Toronto or who want to live in Toronto is finding affordable spaces to live for the long term. I personally don't mind multi-generational households as they make better use of existing housing stock and can provide better familial supports, but it does come at a cost of professional independence.

I think that rather than relying entirely on large-scale construction (which still takes time to bring into housing inventory), making better use of the existing housing stock would be a quicker shot at addressing affordability.

That means resolving AirBnB issues and allowing the existing built form to be transformed into multiunit structures without extensive reconstruction (i.e. allowing suites into single family houses, small additions to the backs of houses). These essentially replicate the organic evolution of older neighborhoods in Toronto, opening a path back to the state of the 'Unplanned' Community.

Toronto Is The Fastest-Growing City In U.S. And Canada, And That’s Not Good
The city's "stunning" growth has a downside.

Torontonians could find themselves “doubling up” on housing with friends or relatives in the coming years as the city’s breakneck population growth outstrips the supply of new housing, an urban planning expert is warning.

But while that may look like success from some perspectives, it means the city is risking a serious housing crisis, study co-author Frank Clayton said.

The region may see a repeat of the situation from the early 1990s, when developers pulled back on home construction amid falling house prices, but the population kept growing.

People found themselves “doubling up” or “tripling up” on housing, often with more than one generation of family living in a single home, Clayton said.

That effect could be particularly strong today, given that younger Canadians are already increasingly living with their parents.

As is the case now, affordability was at multi-year lows. But unlike today, the economy was shrinking in the early 1990s, with the region losing some 200,000 jobs amidst a North American recession. Interest rates were high, making mortgages prohibitively expensive. The result was that developers couldn’t unload empty condos even as residents were forced into shared housing.

Today’s home sales slowdown could result in something similar. Data from Canada Mortgage and Housing Corp. shows developers are reacting to the slowdown by cutting back on new construction.

Housing starts in Ontario fell by more than 15 per cent in the first five months of this year, compared to a year earlier, according to data from Canada Mortgage and Housing Corp. In Toronto itself, housing starts so far this year are down 24 per cent, and housing completions are down 22 per cent from the same period last year.

“It means we need more housing supply,” Clayton said, especially at the low end of the housing market.

Clayton says the single best thing the region could do ― “but which they won’t do” ― is to open up single-family home neighbourhoods for multi-unit buildings of up to three or four stories.

But he’s skeptical of the city’s proposal to mandate inclusionary zoning — in essence, making a requirement that new condo buildings include some percentage of affordable homes, meaning below market rates. Clayton believes developers will simply unload the added costs onto buyers of the market-priced units.

“They’re going to raise the prices on the other 80 per cent. Which means other people have to pay more. If they try to up the prices, then resale condos become a better deal … so you give a windfall to existing homeowners again.”

Also, that plan relies on the construction of large condo buildings to meet housing needs, and “research is showing that millennials want something more than a high-rise,” Clayton said, referring to surveys showing Canadian millennials overwhelmingly prefer low-rise housing.

Toronto Is The Fastest-Growing City In U.S. And Canada, And That’s Not Good

The city's "stunning" growth has a downside.

www.huffingtonpost.ca

 

[jje1000]

Thread by Alex Bozikovic on the current challenges of small-scale intensification:

https://twitter.com/x/status/1136981634245283842

 

[SunriseChampion]

So, I recently became privy to all sorts of rental information in regards to my neighbours. So, the neighbour next door to me, with a slightly better view is paying 935$/mth for a 1 bedroom that is 9m2+ bigger than mine whilst I'm paying 1700$/mth for my smaller 1 bedroom, because it's partially renovated. I'm not jealous or anything...I mean, the lady's a pensioner....but it makes me laugh inside (laugh because crying is defeatist). A bit of new tile, new kitchen cupboards and bottom-end stove and fridge and double the price! Welcome to Toronto.

 

[jje1000]

Interesting assertion that dovetails into the whole issue of the yellowbelt/neighbourhood preservation, and the difficulty of small-scale urban redevelopment in Toronto. On the flipside, it does speak to the fact that beyond a few instances, heritage preservation in Japan seems to focus on individual buildings, so neighbourhoods can be regularly churned up- both a good and bad thing depending on your view.

Tokyo proves that housing shortages are a political choice

Compared to skyrocketing housing costs in many Western cities, Japan has seen remarkable success in supplying affordable housing – even in cities with lots of economic growth. While average mean rents in London are upwards of £2,000, average rents in Tokyo are about £1,300 – even after Brexit-related depreciation of pound sterling.

This isn’t caused by social housing or danchi – less than 5 per cent of homes across Japan are socially rented, compared to about 17 per cent in England. And it’s not because Japan’s population is shrinking either – Tokyo’s population is still growing due to migrants from other parts of Japan and abroad.

Instead, it’s because the supply of housing in Japanese cities is responsive to local demand. While the UK saw about 194,000 houses start construction last year, Japan saw 942,000 housing starts last year.

Even though Japan demolishes and rebuilds lots of houses, the net increase in homes is still much larger than the UK – about 600,000 homes (Table 5) are added to Japan’s dwelling stock every year. Tokyo has added roughly 110,000 homes a year since 2003, compared to 20-40,000 a year in London over the same period.

These homes are often smaller than what we’re used to – the average property in Tokyo is 55 square metres, compared to 80 square metres in London. But this isn’t the full story. New supply in Tokyo responds to demand by building lots of smaller one-bed flats for singles, and young people can live independently without needing to share with housemates. This means that, even though average homes are smaller, the average Tokyoite probably has more housing floor-space per person today than the average Londoner because living with housemates is so uncommon.

The planning framework that underpins this supply is a simple zoning system that allows by-right development, rather than one that relies on granting planning permission for each individual site. There are only 12 zones, defined according to the maximum nuisance level they allow, ranging from sleepy residential to polluting industrial uses. The key is that pretty much anything can be built, provided it does not exceed the zone’s nuisance level – so in areas zoned for high street usages it is possible to convert a hotel into housing and vice versa, but this is not possible in residential only zones.

This allows market supply to respond quickly as market demand changes and ensures development and density is driven by land values. If the demand to live in a city grows, older houses can be knocked down by landowners to provide more and better quality homes. In the case of apartment buildings, 80 per cent of the apartment owners need to agree to demolition and redevelopment. This is why Japan’s higher rate of demolition isn’t wasteful, as it enables an efficient supply of more and better quality housing.

As a result, there is a clear difference in Japan between the value of land and the value of the property that sits on it. Like in other countries, the price of land in Japan reflects local economic strength and access to amenities and jobs. But unlike the UK, in Japan, the value of houses declines as they get older, because it so easy to supply new homes. Reflecting this, the property tax valuation of Japanese homes also declines over time, increasing the incentive for local government to build new homes to fund public services.

Tokyo proves that housing shortages are a political choice | CityMetric

If you ever find yourself wondering why there are so few little walk-up apartments in Toronto — of the kind that are absolutely commonplace all across Montreal — you can look to history. “In May 1912, the city declared a full-scale ban on apartment buildings in residential neighbourhoods,” writes Emma Abramowicz in an essay in the new anthology House Divided from Coach House books, which examines the affordability crisis in housing in Toronto. In the 1960s, she writes, planners cemented this occasionally overlooked rule by making preservation of the character of stable residential neighbourhoods a key goal.

This separation between “residential” zones and places where you can develop meaningful new housing has been preserved in the recent zoning and Official Plan changes, other essays in the book make clear, which allow apartment construction pretty much along main streets only, or in new neighbourhoods on former industrial or rail lands. That’s why we see so many sky-high condos springing up clustered in certain areas, and so few triplexes or four-storey walk-up apartments anywhere.

That’s part of the “where” question central to the book’s arguments. If low- and midrise walk-up apartments (and duplexes and triplexes) are the form they argue should be allowed, the location they have in mind is vast: the city’s “yellowbelt,” the area (more than twice the size of Manhattan) that is zoned exclusively for detached single-family residential dwellings. According to book’s authors, if you added just one duplex per hectare in the yellowbelt you could house an additional 45,000 people. The potential extends beyond the city’s immediate borders: John Lorinc reports in his introduction on a report estimating that Mississauga could house 435,000 new people just by allowing low- and medium-density infill development in established neighbourhoods.

Edward Keenan: Why every residential street in Toronto could use a little apartment building

The authors of new book about Toronto’s housing affordability crisis argue the city needs more of a type of housing that is all but impossible to build here, writes Edward Keenan.

www.thestar.com

 

[AlexBozikovic]

Hey, everyone. I wrote in The Globe And Mail about what "neighbourhood character" actually means. No paywall.

https://www.theglobeandmail.com/opi...-character-is-a-euphemism-for-something-ugly/

"And the concept is, for all that, surprisingly vague. When it gets defined, it usually turns out to be a euphemism for something ugly. On the surface, it speaks about architecture and aesthetic concerns, but its substance is about who gets to live where and who, especially today, gets shut out. "

 

[SunriseChampion]

Nice one, @AlexBozikovic !

Neighbourhood "character", my eye. I've always hated hearing that term being bandied about by self-important people with an aversion to change.

 

[jje1000]

Definitely agree that "neighborhood character" is often used as a mask to cover some darker reasonings- in the past, it was sometimes used as a ways of ethnic segregation.

On another note, another ignominious record broken, as rental prices in Vancouver dip- as a note, high rental prices essentially remove money from the economy and act as an economic drag chute:

It now costs an average of $2,735 to rent a two-bedroom home, apartment or condo in Toronto, according to the report — up just a tick over what we saw in May.

Vancouver, meanwhile, saw two-bedroom rental prices dip by more than 7 per cent month over month, down to an average of just $2,709, making the notoriously-pricey west coast city cheaper than Toronto in terms of rentals across the board.

A one-bedroom unit in Toronto is now going for $2,231 per month, on average, based on an analysis of listings from Rentals.ca.

"Average rental rates in Ontario continue to outpace the other major provinces in Canada, as it costs a tenant about $600 more per month to live in a rental apartment in Ontario than in Alberta, Saskatchewan, Manitoba or Quebec," reads the June rent report.

Toronto overtakes Vancouver for most expensive two bedroom rentals

We've gone and done it again, Toronto — we've beat out Vancouver in a competition that nobody wants to win. The June edition of Bullpen Research an...

www.blogto.com