Here’s how rental rates are expected to rise in Mississauga in 2020
If you're hoping to find an affordable rental apartment in Mississauga in 2020, you might struggle to find a budget-friendly place in the inventory-strapped city.
In December 2019, a Rentals.ca December 2019 Rent Report produced by Rentals.ca and Bullpen Research & Consulting, suggested that rents could climb 8 per cent in Mississauga this year.
In fact, the report said that when it comes to significant forecasted increases, Mississauga leads the pack. Other cities where rental rates are expected to increase include Toronto (7 per cent), Montreal (5 per cent), Ottawa (4 per cent) and Vancouver (3 per cent).
The report says that Mississauga finished sixth of 34 cities listed for average monthly rent in November 2019 for one-bedroom units at $1,934 and fifth for a two-bedroom at $2,416.
Rentals.ca and Bullpen forecast that December 2020 rent will be $2,585 per month on average.
“Mississauga will continue to move parallel to the former City of Toronto with prospective renters fleeing Toronto for less expensive units or larger properties,” the report reads.
Rentals.ca says it expects average monthly rents for Canada to increase 3 per cent in 2020.
So, what's propelling rental rates upwards?
Rentals.ca says the company recently talked to 16 housing professionals and experts including housing data analysts, economists, developers, affordable housing advocates, investors and city councillors for their insight on the 2020 rental market in Canada.
The consensus? The country's metropolitan areas need to produce more rental supply—and soon.
The report notes that with it becoming more difficult to buy a house, competition for rentals is heating up.
"Competing in the crowded rental market last year were millennials moving around mostly for new jobs and looking for the best apartment amenities; immigrants finding their way in a new country; and baby boomers retiring, downsizing and selling their homes to capitalize on their equity to rent again. They are tired of mowing grass and shoveling snow," the report reads.
Because supply isn't keeping pace with demand, prices are rising—and more people are spending significant portions of their paycheques on rent.
According to the Canadian Rental Housing Index, 46 per cent of Mississauga households are spending over 30 per cent of their income on rent and utilities.
"Affordability will remain a major issue in 2020," says Matt Danison, CEO of Rentals.ca "We will see more short-term rental regulations, vacancy taxes, co-living developments, smaller apartment units, telecommuting, and millennials living with their parents longer."
The report says that while rental rates won't necessarily climb dramatically across the country, prospective tenants will have difficulty finding affordable apartments—especially as demand continues to outpace supply.
"Rents will continue to climb in 2020 in major metropolitan areas in Canada, but while the increases won’t be as much as the last few years, finding the right rental will continue to be a challenge, according to housing experts from around the country," the report reads.
The report says that as affordability remains a major issue in the new decade for major metropolitan areas, developers, property managers, rental advocates and governments at all levels will need to think creatively and collaboratively to find solutions to higher rental demand.
As far as Mississauga goes, the city has moved to protect its current rental stock as part of its Making Room for the Middle housing plan. The city's new Rental Housing Protection bylaw requires developers to obtain a new permit in order to convert existing rental units to condominium units or demolish rental units. The permit could be withheld if the developer wishes to convert or demolish six or more existing purpose-built rental units, the city's rental vacancy rate is below 3 per cent (the current overall vacancy rate is 0.8 per cent) or rents are 1.75 times average market rent or lower.
While the city is doing its part to protect its rental stock and encourage the development of more units (several new rental buildings have been approved), the report says that some experts are calling for cities to consider more density through “unicorn sites."
"Unicorn sites" is a term used to describe a piece of property with one or two towers with room for a third and even a fourth tower.
The report also says that cities besides Vancouver could consider whether to tax owners of empty units.
Interestingly enough, the report notes that Canadians are rethinking housing. Some ideas that have emerged are buildings being redesigned for co-living; smaller, but more affordable apartments near city centres; and rentals offering dens as offices or turning lobbies into co-working spaces.
The report also says that more people could end up leaving the rental market if adjustments are made to the federal government's mortgage stress test (which requires buyers to qualify at rates higher than what they'll ultimately be paying).
The government is currently reviewing the measure.
But while experts are calling on all stakeholders to work together to fix the problem, the report acknowledges that "fixing" the rental market, which is dealing with a great deal of disruption, will be difficult.
According to the report, veteran housing analyst Ben Myers has one wish for 2020:
"I wish everyone on all sides of the housing debate would do a bit more reading on solutions that have actually worked and more research on what policy changes have not worked."
Myers, the president of Bullpen Research & Consulting says that the mortgage stress test, expanded rent control, changing Airbnb legislation, rapid population growth, and record, rental housing construction continues to disrupt the balance between supply and demand nationally.
"We expect the market to continue to be undersupplied overall in Canada in 2020."
The report also notes that the shifting rental market is seeing more families rent as opposed to buy, and they are opting to choose to live near “quality schools” rather than transit centres and other conveniences.
According to the report, Tony Irwin, president of the Federation of Rental-housing Providers of Ontario (FRPO) agrees that everyone needs to work together to tackle the issues efficiently.
Irwin told rentals.ca that he wants to see disparate groups—including NIMBYs, tenants groups, politicians, builders and property managers—get together to "engage with one another and actually get something done."
Myers says he does see a few things happening in the Toronto market specifically in 2020, including more renovations of older run-down apartments; more rental apartment starts with a greater focus on smaller units, more affordable units and more shared amenities; more alternative rental options like laneway suites, tiny homes, co-living developments; and more buildings sold as condominiums to individual owners who agree to lease all suites in the building in a pooled rental arrangement.
But while it's hard to predict what will happen, it's clear that stakeholders—including developers and municipalities—know there's a pronounced need for more rental stock.
For that reason, experts predict more stock will be built in the not-too-distant future.
“In 2020, while rents will still rise,” says Matt Danison, CEO of Rentals.ca.
“We expect to see investors and developers shift from the condo frenzy into building more rentals.”
To read the full report, click here.
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