Young professionals struggle to rent in 'crazy' real estate markets

  10/15/2016 |   SHARE
Posted in Real Estate Market by Vanguard Realty | Back to Main Blog Page

For many young professionals chasing the dream of home ownership, "I'll be renting forever" is a common lament as real estate prices in hotspots like Toronto and Vancouver remain sky-high.

But even with good jobs and decent incomes, some 20- and 30-somethings are realizing that renting an apartment or condo is no easy task in these enormously competitive housing markets.

"It's impossible — and that's with two working professional people," said Alena Rebmann, 32, of Surrey, B.C., who is searching for an apartment or condo to rent in Vancouver with her husband, Nawab Singh.

With a maximum budget of $2,500 a month, the two technology professionals are willing to cram into a small space if it means they can live in a downtown neighbourhood they like.

"We'll even settle for a bachelor [apartment]," she said.

Vancouver's rental vacancy rate is less than one per cent — the second lowest recorded in the country after Victoria — according to the Canada Mortgage and Housing Corporation (CMHC).

Toronto's vacancy rate of 1.6 per cent is also well below the rates in other large Canadian cities, including Montreal (four per cent), Calgary (5.3 per cent) and Halifax (3.4 per cent).

On Friday, real estate consulting firm Urbanation announced Toronto's condo rental market "has become severely undersupplied," with rents rising to an average of just under $2,000 per month.

"It's crazy," said Toronto-based real estate agent Jarrod Armstrong. "Despite all the towers, all the cranes, all the highrises ... there is a limited number of rentals in the city."

Airbnb has been blamed for worsening the situation in Vancouver and Toronto by taking more apartments and condos out of the long-term rental market as owners try to make more money by renting them to more people for short stays.

Vancouver Mayor Gregor Robertson has said he wants to combat the trend by imposing a licence requirement on short-term rentals. He has also vowed to create a vacancy tax on investment homes— including condos that owners leave empty — in an effort to encourage more rental availability.

But experts say the rental crunches in both cities are largely due to broader economic factors, including a combination of positive growth in the job market with prohibitively high housing prices.

When the job market improves and young people are working, they're more likely to "move out of their parents' basements" and look for homes of their own, said Andrew Scott, a senior market analyst for the Greater Toronto Area with CMHC.

But as these new renters enter the market, existing tenants aren't creating new vacancies, since they're choosing to keep renting instead of trying to buy a pricey home.

That combination contributes to a "very tight rental market," said Robyn Adamache, CMHC's principal market analyst in Vancouver.

She says the rental landscape in Vancouver is also complicated by its geography, which limits how much new housing can be created.

"We're surrounded by the mountains, the ocean, the border," Adamache said, noting there's also a significant amount of land in the Vancouver area reserved for agriculture that can't be developed.

Roommates needed

Whatever the reasons behind the low vacancy rates, young professionals in both cities are trying different tactics to deal with high rental prices and stiff competition for the apartments and condos that become available.

Sami Larbi, 27, recently got a promotion at the software firm where he works and is eager to finally move out of his parents' home in Vancouver. With a monthly rent budget of $1,200, he has reluctantly placed an ad on Craigslist seeking a roommate.

"I've lived with my big family all my life, so it would be nice to live by myself for once," Larbi said. "But that's just not a reality in Vancouver."

He says many of his friends are in the same boat. If they have a boyfriend or girlfriend, they move in together to save on rent. If they don't, they need one or two roommates to share the cost.

Even when they can afford the rent, potential tenants often find themselves in competition with several others vying for the same apartment or condo.

Some people, like Rebmann in Vancouver, try to set themselves apart from the rest of the crowd by posting ads with photos and information about themselves that they hope will appeal to landlords.

"My husband and I are a quiet, clean, non-smoking, respectable professional couple with a small kitten (our cat has clipped nails so she does not scratch)," Rebmann's "Apartment Wanted" ad on Craigslist reads. "Please call/email /text me. We are very reliable and have excellent references!"

'Call back and it's gone'

She says they make sure they have the necessary documentation ready for landlords, including references and pay stubs.

"[It's] almost like a full ... background screening check on every level," she said. "You submit all this and you look fantastic on paper and you go and you ... get interviewed in order to even be considered a candidate."

Rebmann, who has been searching for a few months, says rental units are snapped up almost as soon as they are listed.

"Every day I'm like on Craigslist and talking to realtors," she said. "They'll have something and then I'll call back and it's gone."

Shane Lee, a 29-year-old who works at a car dealership in Toronto, said he and his wife had to be "lightning quick" to rent their one-bedroom-plus-den condominium, at a cost of $1,850 per month, in the developing downtown neighbourhood of Regent Park.

The couple enlisted the help of a real estate agent (who works with Jarrod Armstrong) to find a rental home — something Lee said he hadn't needed to do when searching for a place to live several years ago.

"I've never needed help from anybody, I kind of just browsed myself, found a place and, you know, made it happen on my own."

But he doubts the couple would have even known their condo was available to rent without the agent's help, because many units didn't appear in the listings they were searching themselves.

"She had a lot of options that we didn't even know existed," Lee said. "It's definitely not a renter's market."

Condo Rental, Home Rental, Millenials, Property Rental, Real Estate, Rental Market, Rentals, Toronto, Vancouver