When we compare ourselves, we comfort each other. While the housing shortage in Montreal is growing, the challenges that tenants face in finding affordable housing remain far greater in Toronto, even when we factor in the wage differentials between the two metropolitan areas. Game Status.
For a household to be considered affordable housing, the rent must not exceed 30% of that household’s gross monthly income. In metro Quebec, like Queen City, the number of renters spending this threshold on housing decreased between 2016 and 2021, according to Statistics Canada. But the percentages remain high. For example, 28% of renters in the greater Montreal area are in this situation; a rate reaching 40.5% in Toronto.
According to data from the Canadian Society of Mortgages and Housing (CMHC), the average income of a renter household in the Greater Toronto Area will reach $66,500 by 2020, which is $11,100 more than what a renter household in the Greater Montreal earns annually.
Despite this pay gap, in 2021 a metro Toronto resident had to work an average of about 178 hours per month at the average hourly wage in the area to spend no more than 30% of their gross income on housing, versus 106 hours per month in the case of a renter household in the area Montreal, notes the CMHC.
This difference of 72 working hours per month between the two cities is largely explained by the fact that rents in Toronto are still significantly higher than in Montreal. You have to spend more to rent a studio there than the average rent for a three-bedroom apartment in Montreal, which was $1,193 per month in 2021, according to CMHC.
“When I started my PhD, I had a monthly stipend of $900 that I received from teaching. It wasn’t even half our rent,” says Montreal native Émilie von Garan, who moved to Toronto in 2015 for her master’s degree. Based in Toronto, she says, “I’m constantly looking for a 2nd, 3rd, 4th job.
Laura Lee, who grew up in the Toronto suburbs, moved to Montreal in 2012 for college. “It’s just easier to make a living here because the rents are lower,” says the woman, who still pays $1,725 a month for a “big apartment” with a basement that she shares with two people in the Villeray area.
The gap is widening
The rent gap between the two cities has also continued to widen in recent years, with annual increases in Toronto being higher than Montreal’s since at least 2017, with the exception of last year if we rely on CMHC data.
According to the latest monthly report from Rentals.ca, which casts a wider net than CMHC in its analysis of rents, the average rent for a two-bedroom unit in the city of Toronto still reached $3,319 in November, up 24%. compared to the same date last year.
There are many reasons for this stronger rental growth in the Queen City. First, after a slowdown seen in the first year of the pandemic, students and immigrants returned to Toronto in large numbers in 2021 and 2022. Ontario welcomes 45% of newcomers to the country and three quarters go to the Toronto area. The same phenomenon happened in Montreal, but on a smaller scale: Ontario welcomed more immigrants in the fourth quarter of 2021 than Quebec in the previous four quarters.
This resumption of immigration after health restrictions were lifted has led to a “revitalization of rental prices,” notes real estate data manager David Aizikov, who contributes to the Rentals.ca reports, in an interview. In this context, “demand for rental housing is growing, but there is not enough supply,” which is driving rents higher, continues CMHC analyst Dana Senagama.
Montreal is also better at responding to rising demand than Toronto. There are 26 rental units per 100 residents in Montreal, compared to just 10 in Toronto. This difference is due to history—Montreal was densely built and still is more densely built than Toronto—but also to more recent developments in the real estate market.
Since 2015, many more rental units than condos have been built in the greater Montreal area, says CMHC analyst Francis Cortellino. On the other hand, in Toronto, six to seven condos have been built for every rental unit in the last 10 years.
Still, the rental vacancy rate has continued to decline in Montreal in recent years, especially before the pandemic. In 2019, it reached an all-time low of 1.5% in the agglomeration before rising again in the context of the health crisis. For many households, rents are also rising faster than incomes.
“I think people have to organize to get at least a rent freeze or a rent cut because right now because of inflation it’s like we’re all getting a pay cut,” says Laura Lee. The tenant has to spend more than half of her salary on her monthly rent. However, Montreal is more likely to see new rent increases in 2023 due to the significant increase in property taxes included in the city’s recent budget.
I think people need to organize to at least get a rent freeze or rent reduction because right now with inflation it’s like we’re all getting a pay cut.
boomerang effect
Measures to limit the increase were taken in Ontario in 1975 when the province introduced some regulation of rents. However, according to the experts surveyed, the measure led to a reduction in rental housing construction in the city: 66% of Toronto’s rental housing was built between 1960 and 1979.
“Prior to the 1980s, condominiums weren’t popular in the city of Toronto,” says David Aizikov. Then the construction of this type of housing “exploded” at the expense of rental housing.
In the past, Torontonians in their early 30s, like Emilie von Garan, opted to buy a home, which reduced the number of renters in the city. But that is no longer possible for many. A home in the greater Toronto area averages $1,098,200, more than twice that of a home in the greater Montreal area. “The idea of having a house is absolutely impossible, even the idea of having room for a child,” admits Emilie von Garan, who pays $1,975 a month in rent for a house where she lives with her family .
Laura Lee, 28, has completely ruled out returning to her hometown of Toronto to buy a home. “It’s just unaffordable in the neighborhood I grew up in because Toronto has done a lot of urban sprawl,” she says. Although she expects to have a salary that matches her parents’, the one who currently lives in Montreal says she could never dream of buying a home in the same area as her parents, north of Toronto.
This story is supported by the Local Journalism Initiative, which is funded by the Canadian government.