30 per cent income-to-rent ratio not achievable for many Millennials, according to Rentals.ca survey

Paying rent each month is becoming a tougher task for many Canadians, and renters are in for even harsher times, with higher rents and lower vacancy rates.

But some resourceful renters find a roommate or two as a way to ease the monthly burden.

These are two major findings from respondents in two Rentals.ca Facebook contests asking what percentage of their income goes toward rent and also if they pay it alone or shared the payment with roommates.

The two winners of the contests chosen randomly, Robert Rasciauskas, 23 of Toronto and Bree Barber, 24 of Calgary, each received a month of free rent.


The results from the comments of all the contestants, while by no means scientific, are in line with studies by the Canada Mortgage Housing Corporation and the Canadian Rental Housing Index.

The one notable difference in the Rentals.ca survey vs. the other studies shows more than 40 per cent of the Facebook commenters in the first survey said they paid more than 50 per cent of their income for rent.

This is more than double the percentage reported in May 2018 by the Canadian Rental Housing Index British Columbia Non-Profit Housing Association, which says 18 per cent of Canadian renters spend more than 50 per cent of their income on housing. The Rental Housing Index says 40 per cent of Canadian renters pay more on housing than the threshold 30 per cent income-to-rent ratio.

The findings from the Rentals.ca Facebook contests most likely skew higher because most of the respondents are millennials, and typically younger renters pay a higher percentage of their income for rent while having lower salaries.

Only 17 per cent of the Facebook contestants said they paid 30 per cent or less of their income for rent. Most financial and housing advisers recommend the 30 per cent threshold of rent-to-income ratio. For many renters in Canada, that axiom might not be achievable or reasonable.

One of the Facebook contestants, Stephanie Clarke of Guelph, Ontario, pays 30 per cent of her income for rent, but she added:  “It’s only this ‘reasonable’ because I earn a living wage and share an apartment with a roommate. To live alone here on a full-time minimum wage job, 60 per cent  or more would go toward rent.

“We are in an affordable housing crisis,” she said. “And nothing is being done about it.”

The second survey showed about 48 per cent of the commenters shared rent with a roommate(s) or partner to make ends meet. But in some cases, even roommates are not enough to bring down the rent-to-income ratio to 30 per cent.

Facebook contestant Ashley McIntyre of Ottawa pays 42 per cent of her income for rent. “But only because I share with someone,” she said., “Otherwise, it would be 83 per cent.”   

Will things get better for renters for the rest of  2019?

From most indications, 2019 will be more of the same. More renters are entering the market, not enough units will be built/available to accommodate the increased demand, and rents will edge up in most Canadian cities.  

The rental vacancy rate in Canada dropped from 3 per cent in 2017 to 2.4 per cent in 2018, a 10-year low, according to the Canada Mortgage Housing Corp. Some government measures could change that in 2019, but we’ll wait and see.

The low vacancy rates combined with increased immigration could tighten the market even more driving up monthly rents, according to Rentals.ca predictions for 2019.

Rentals.ca along with Bullpen Marketing & Consulting have forecast a 6 per cent year over year average rent increase for 2019 in Canada. In Toronto, Mississauga, Vancouver and Ottawa average rent increases will outpace the rest of Canada. The Rentals.ca numbers reflect asking rents on vacated units, which may be higher than actual market value. However, these figures better represent the actual rents a potential tenant would be facing when seeking to rent an apartment.

Another Facebook contestant, Jennifer Lynn of Halifax, of Nova Scotia, said her rent is “31 per cent of our income. But keep in mind that my husband works 60-plus hours a week to make it that percentage.”

According to a recent story in “Rental Housing Business,” rents rose in January at a faster rate month over month than any time in the past 30 years. “The cost of renting an apartment in Canada shot up 0.9 per cent in a single month in January, according to Statistics Canada, the fastest one-month leap since August, 1989”, the RHB reported.

According to the March national rent report from Rentals.ca, the average and median rents in Canada rose in each of the last three months, as demand has increased before the prime spring leasing season.

Facebook contestant Heather Soucie of Edmonton, Alberta, said “two incomes keeps their rent-to-income ratio at 23 per cent.” But she added, “On my own, I would have to pay 62 per cent of my income toward rent.”

Other details from the two contests include:

  • The two Facebook contests had 1,300 entries from 151 Canadian cities. (843 respondents in the first survey and 457 to the second).
  • The cities* with respondents with the highest rent-to-income ratio are Victoria, British Columbia, at 65.44 per cent, Sudbury, Ontario, at 64.66 per cent and Saskatoon, Saskatchewan, at 64. 32 per cent.  

           *Only cities with 10 or more responses were considered.

  • 52 per cent of respondents in the second survey pay the full amount of rent without roommates, while 48 per cent of respondents had roommates to divvy up the monthly rent.
  • On average, respondents sharing the rent had two (1.9487) roommates.
  • 39 per cent of the contestants in the second Facebook survey received a rent increase in the last year, while 61 per cent did not receive a rent hike.

A smattering of results from other Canadian housing reports point to tight times ahead for renters, but the government has also made some moves to try to turn around the housing crisis:

From the Canadian Centre of Economic Analysis and the Canadian Urban Institute’s Toronto Housing Market Analysis report released earlier this year:

  • “People are stuck – Toronto’s housing and homeless support system is bursting at the seams.
  • There is a significant shortage of new purpose-built rental housing.
  • The rental market is becoming more expensive and middle-income households are priced out of the ownership market.
  • Toronto’s population will grow at a faster pace than in the last 10 years, and the city’s population will get older.
  • More people will live in low-income households.
  • The social housing waitlist will continue to surpass the number of available units.”

In December, The Rental Housing Task Force, released,  23 recommendations to ease the housing crisis in British Columbia. At the top of the list is ending ‘renovictions,’ and “working with local governments to develop tenant compensation and relocation in case of demolition of purpose-built rentals.”

According to the Fraser Institute in 2018, “periodic surveys of homebuilders conducted between 2014 and 2016,” shows it can take a long time before “shovels break ground for new housing — especially where it’s in highest demand. For example, building permit approval timelines averaged almost 18 months in Toronto and 21 months in Vancouver, arguably the two most housing-starved cities in Canada.”

The institute reports that in In Calgary, Edmonton and Montreal, approval timelines are typically longer than a year.

The institute’s findings point out that approval timelines are from four to seven months in smaller cities near these bigger cities. The report concludes that city hall has a big effect on slowing housing supply in major metropolitan areas.

Canadian housing affordability is now at its worst level since 1990, according to the September 2018 Housing Trends and Affordability Report  by the Royal Bank of Canada Economic Research report.

The report says: “RBC’s aggregate housing affordability measure rose to 53.9 per cent in the second quarter of 2018 – up significantly from 43.2 per cent just three years ago. Skyrocketing home prices in some of Canada’s largest markets gave the initial push, but it’s been rising interest rates that have been driving the measure to near-record levels in the past year.

“RBC’s housing affordability measure is calculated as a share of household income. A higher number means that buying a home is less affordable.” the report says.

Here’s some measures the government is offering up:

Canada’s first National Housing Strategy, A Place to Call Home is a 10-year, $40-billion plan announced last year to strengthen the middle class, fuel our economy and give more Canadians across the country a place to call home,” according to its website.

The plan’s 10-year goal is to find adequate housing for 530,000 families from the country’s 1.6 million families that “don’t have a home that meets their basic needs.” In that same time, the strategy is to build up to 100,000 affordable homes.

Also under the National Housing Strategy and through the Canada Mortgage Housing Corporation, the Community-Based Tenant Initiative will provide $10 million in funding over five years for local organizations that assist people in housing need to access resources and information about their housing options.

Canada, through the Federal Lands Initiative, is using $200 million to pay for surplus federal property to help develop more affordable housing. (This is another program under the National Housing Strategy through the Canada Mortgage Housing Corporation).

In the latest government action announced March 20, the CMHC will offer up to 10 per cent of the costs for new homes and 5 per cent for existing homes for low-to middle-income residents. The three-year program will offer $941 million over three years, which will be a boost for first-time buyers.

Many would-be, first-time home buyers have shied away from the real estate market because of the mortgage stress test introduced last year. Under, the stress test, homebuyers have to prove they can afford a mortgage rate at 2 per cent above the lender’s rate or at the Bank of Canada’s 5-year-fixed rate (5.34 per cent), whichever is higher.

Also announced in the federal budget March 20, the Canadian government will spend $7.5 billion over nine years to help developers construct about 42,000-plus more rental units. The government also set aside $226 million for cities to offer up land to build more units.

These measures should open up more rental supply, especially on the affordable side. How many more units will be available as a result of these government incentives is hard to determine, but some experts believe the need is in the six-figure category.   

Although the government is taking steps to turn around the housing crisis in Canada, experts debate whether these measures will work in the long run, or whether they will only serve as a Band-Aid for the short term. And, other experts wonder whether more government intervention will only worsen the housing crisis.