Market not responsible for out of control rents
By Lethbridge Herald on February 17, 2023.
Ricardo Tranjan
CANADIAN CENTRE FOR POLICY ALTERNATIVES
A new report from the Canada Mortgage and Housing Corporation (CMHC) shows that rents are skyrocketing in many, if not most, Canadian cities. No surprise there. But this year’s annual report also documents, for the first time, rent increases in vacant units. It shows rents going up by an average of 18 per cent between tenancies. In some cities, average increases are close to 30 per cent.
So who is to blame for these whopping rent increases?
Between 10 per cent and 35 per cent of rental units in urban areas become vacant every year. This means that within just a few years, rent for large shares of units increases well above wages, gradually making entire cities unaffordable to working families.
Big rent increases also make moving expensive.
According to the CMHC report, the average asking rents for vacant two-bedroom units in Victoria were $530 higher than the rent paid in occupied units. The gap is around $400 in Calgary and Toronto, $350 in Montreal, and $205 in Halifax.
In other words, moving to a same-size unit within these cities can cost between $2,500 and $6,400 in additional rent a year.
The freedom to move to where work, family, or lifestyle choices take you is one of the many underrated benefits of renting, but not when the price tag of moving is this high.
Worst of all, the absence of rent controls in vacant units encourages evictions.
When landlords can hike up rents by however much they want between tenancies, a good tenant is a tenant who is about to move out.
Landlords have no financial incentive to keep long-term tenants. On the contrary, they have an incentive to push them out.
In fact, many bad landlords create pressures for tenants to leave. These take different forms: consistently increasing rents to the maximum allowed, ignoring repair requests, or imposing new rules that make day-to-day life uncomfortable or unpleasant.
There are also the notorious renovictions. Some landlords kick out tenants on a false pretense, only to give the place a fresh coat of paint and put it back on the market at a higher rent.
With so much talk these days about inflation, high gas prices, and grocery bills going through the roof, average rent hikes of 18 per cent should instantly make splashy national news. But they didn’t.
They didn’t because no one, apparently, is ever responsible for soaring rent prices. In Canada, when rents go up, we blame “the market.”
The CMHC report is a case in point. It explains that, with the end of pandemic restrictions, youth can again find jobs and move out on their own. Immigration numbers are picking up, increasing demand for rentals.
And with high interest rates, prospective first-time homebuyers are deciding to rent for longer. Although a lot of new rental units entered the market in recent years, demand has outpaced supply, the report explains.
This analysis is not incorrect. But it is only part of the story – the one most often told.
The other part of the story is about choices.
Canadians don’t have to be held hostage by market forces. Governments have many ways to protect families’ basic need for housing – if they so choose.
In Ontario, B.C., Manitoba, and P.E.I., occupied units are protected by rent controls that curb excess profit while allowing rents to keep up with inflation.
Only P.E.I. and Manitoba have controls on vacant units.
They used to be more common, but most provinces have lifted them, allowing the few landlords to charge more from the many tenants.
So let’s not blame “the market” for our woes. Landlords choose to hike rents to increase profits, and our governments choose to let them.
Ricardo Tranjan is a political economist with the Ontario office of the Canadian Centre for Policy Alternatives and author of the book The Tenant Class.
© Troy Media
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There is a group of realtors in Lethbridge that I spoke with candidly who admitted real estate was too low priced in Lethbridge and wanted to see increases closer to Calgary.
When I heard this my neck veins popped out, with face red, I was very upset.
Are you nuts? When property prices go up, rent goes up!
Increasing minimum wage was a factor for inflation. When many of the people who worked in grocery stores, big box stores, retail, warehouses, restaurants, etc. increased, the costs of those products increased. Before those products are in stores it has already been touched by many others making minimum wages in warehouses, shipping and other areas, increasing the prices.
They should have given tax breaks and other special breaks to help them instead of increasing minimum wage. Also, when someone was making $15 per hour and the person making $10 per hour got an increase, do you not think the person making $15 per hour will want a raise as well? Now it has been perpetual, because the person making $20 per hour wants a pay and so on!
High priced rent has put many on the streets and at no time have I seen so many not able to afford basic shelter. In my mind it is all about greed and doesn’t take into account the high costs to society for people now having to be supported because they are on the streets because they could no longer afford a home/apartment.
It is shameful!
you know what is truly shameful? people working full weeks, often doing so piecing together hours from multiple employers that do not wish to pony up for full time worker, and ending up at or below the poverty line and without much or anything in the way of benefits; people that manipulate property prices – and they do – which results in impoverishment for the many because so much of one’s limited income goes toward housing; people that are so overvalued in our reckless system, whereby they make oodles more than others with little to no actual value being added to society; highly paid lobbyists (often former politicians and bureaucrats, already fatted by the public purse) that represent massive cos (that are also already fatted by the public purse) so as to suck more public money and favours [hello private healthcare; fake “green” energy options that are not an honest, sustainable alternative – meaning they are not in the least better NET enviro healthy options…although we do need sustainable alternatives] into their client’s already overstuffed pockets, resulting in less wealth and services for the overburdened masses; ceos that typically make more money inside a week than the typical worker will in a year; and, consider the likes of entertainers/athletes that take away so much for what amounts to really nothing returned. that seems to me some of the truer examples of shameful – not the measly, piddling 15$/hr min wage.
as shameful, we can further add what the many of us are most guilty of: believing our unlimited wants are worthy goals to be fulfilled. indeed, no matter what we ever might uncover to be a sustainable, enviro-friendly energy source, it is our pursuit of unlimited wants/junk – be it due to a belief that that is happiness, or, ego-driven prestige – that is undermining sustainability. spun another way, we could use a simple mathematical understanding to represent the issue: the more people on the planet, the less wants/junk we can have; or, wants/junk are inversely proportional to population.
Right and of course you would know as you sit back and collect your AISH cheques from the Alberta Government.