NEW MEASURES TO STIMULATE NEW RENTAL HOUSING
REMI - Erin Ruddy
It’s no surprise that Canada’s insufficient rental housing supply featured prominently in the federal government’s fall economic update, delivered November 21st. Introducing a slew of new measures to help restore housing affordability, the federal government’s plan includes getting more shovels in the ground by addressing the skilled labour shortage, introducing billions of dollars in financing toward the creation of more purpose-built rental homes, and cracking down on short-term rental operations.
“Our economic plan is about building a strong economy that works for everyone, and this Fall Economic Statement is the next phase of our plan,” said Chrystia Freeland, Deputy Prime Minister and Minister of Finance. “With a focus on supporting the middle class and building more homes, faster, we are taking action on the priorities that matter most to Canadians today—and we will continue doing everything we can to deliver for Canadians from coast to coast to coast.”
"We are pleased to see several pro-housing, pro-supply measures on the table today, including a commitment of $15-billion in low-cost loans for new purpose-built rentals and $1-billion dedicated to new non-profit housing,” said OREA CEO Tim Hudak. "
So far, response from the sector has been largely favourable with advocates calling the new measures “promising”—or at the very least, a step in the right direction. Referring to the housing crisis as the worst in generations, Richard Lyall, president of the Residential Construction Council of Ontario (RESCON), put it this way: “Billion-dollar fixes are being proposed, but the housing supply crisis and affordability issue is a trillion-dollar problem, as noted by the CMHC. We are encouraged that housing is a main focus of the feds but there are still many impediments that were not addressed such as the enormous infrastructure funding gap faced by municipalities that impedes new home construction. We need a Marshall plan-styled strategy with respect to the chronic housing supply shortfall.”
Meanwhile, Toronto Mayor Olivia Chow expressed disappointment in the increased housing investments, referring to them as ‘not ambitious enough.’ “Toronto urgently needs more money to alleviate the dire housing crisis,” she told reporters after the update. “There’s a plan there, it’s promising—but the people need more, faster.”
One way the government hopes to bring more rental housing to market quickly is by cracking down on short-term rental operators. It’s estimated that Montréal, Toronto, and Vancouver alone lost 18,900 homes to short-term rental use in 2020—homes the government says could have been used for permanent rental housing.
To harness them for long-term usage, short-term rental operators in Canada will soon be denied income tax deductions for expenses incurred to earn short-term rental income, including interest expenses in provinces and municipalities that have prohibited short-term rentals. The 2023 Fall Economic Statement is also proposing $50 million over three years to support municipal enforcement of restrictions on short-term rentals.
On the construction front, Canada’s housing supply has not been keeping up with the growth of its communities, and rental housing in particular is short of where it should be. The government hopes to spur new development by giving builders access to low-cost financing offered through the new Apartment Construction Loan Program, previously known as the Rental Construction Financing Initiative. Since 2017, the program has committed over $17 billion in loans to support the creation of more than 46,000 new rental homes. Now, an additional $15 billion in funding will be used to support an additional 30,000 rental homes.
According to the feds, “the new Apartment Construction Loan Program will be available to provinces and territories that are ready to deliver thousands of new homes for the middle class, along with the community supports, such as affordable early learning and child care, that families depend on to get ahead.”
While it was noted that CMHC requires some processing time to ensure investments meet the right policy criteria and risk level, the government indicates that efforts will be made to get things done faster. As per the fall statement, future housing developers can look forward to improvements in the approval stage, with CMHC vowing to “streamline and simplify requirements and application processes and fast-track shovel-ready projects and applications from trusted partners.”
“Outdated and unnecessary zoning restrictions delay development and increase costs—and in too many cities across the country, they prevent housing from being built at all,” the Fall Economic Statement concludes. “The federal government is working with governments across Canada to help them cut red tape, speed up permitting approvals, lift zoning restrictions, and build more homes, faster.”
APARTMENT RENTS KEEP RISING
Toronto Real Estate Board
Demand for and supply of rental condominium apartments continued to grow in the Greater Toronto Area (GTA) during the third quarter of 2023, as reported by REALTORS® through TRREB's MLS® System.
Over 14,400 condominium apartments were leased through TRREB's MLS® System in the third quarter of 2023, an increase of almost eight per cent compared to Q3 2022. Over the same period, the supply of units for rent was up by more than 22 per cent.
"Strong population growth and high borrowing costs continued to drive demand for GTA rental housing in the third quarter. Would-be first-time buyers, who have seen affordability erode over the past year-and-a-half due to high mortgage rates, have remained in the rental market. Many new permanent and temporary residents have also turned to the rental market for housing. Renters can expect this trend to continue for the foreseeable future, underpinning the need for a sustainable pipeline of rental housing supply," said TRREB President Paul Baron.
The average lease rate for a one-bedroom condominium apartment in Q3 2023 was $2,633 – up 6.1 per cent compared to Q2 2022. The average lease rate for a twobedroom condominium apartment in Q3 2023 was $3,430 – up 7.8 per cent compared to Q2 2022.
"The supply of units for rent has increased at a faster pace than rental transactions over the past year. Many investor-owned units have been listed for rent, in response to very strong rent growth and, quite possibly, the actual or potential introduction of tighter regulations surrounding vacant units and short-term rentals. However, despite a better-supplied market, competition between renters has remained strong enough to sustain above-inflation rent increases," said TRREB Chief Market Analyst Jason Mercer.
FINANCE AND REAL ESTATE JOBS TAKE A HIT - SIGN OF THE TIMES??
STATSCAN / THE APARTMENT GROUP
Employment was little changed in November (+25,000; +0.1%) and the employment rate fell 0.1 percentage points to 61.8%, as growth in the population continued to outpace employment growth. The unemployment rate rose 0.1 percentage points to 5.8%, continuing an upward trend observed since April.
Employment increased in manufacturing (+28,000; +1.6%) and construction (+16,000, +1.0%). There were declines in wholesale and retail trade (-27,000; -0.9%) and finance, insurance, real estate, rental and leasing (-18,000; -1.3%). Losses in the wholesale and retail trade areas were expected as people are buying less and less due to inflation and the overall negative forces in the economy. We all know the stats of the real estate market especially in the commercial and investment sectors. Sales volumes are down over 60% in most markets and this has been gong on for the past 18 months. With fewer and fewer deals being done there are fewer and fewer need for Realtors and Mortgage Brokers.
The number of private sector employees rose by 38,000 (+0.3%) in November, the first increase since June. Meanwhile, the number of self-employed workers decreased by 25,000 (-0.9%), partly offsetting cumulative increases of 76,000 (+2.9%) in August and September. The number of public sector employees was little changed in November, but was up by 98,000 (+2.3%) from June.
Employment held steady for core-aged (25 to 54 years old) men and women in November. Among women in this age group, an increase in full-time work (+34,000; +0.6%) was partially offset by a decrease in part-time work (-21,000; -2.1%). Overall employment was little changed for youth and older workers in November. Compared with a year earlier, unemployed people in November were more likely to have been laid off from their previous job, reflecting more difficult economic and labour market conditions in 2023 compared with 2022.
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