Where Will All The Renters Go?

  • 6 years ago
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Vancouver’s tenants feeling the squeeze as rentals prices rise
Kerry Gold
Special to The Globe and Mail
Published Friday, Jun. 05, 2015 5:47PM EDT
Last updated Saturday, Jun. 06, 2015 11:16PM EDT
There’s an old rental building on Main Street that is undergoing a major renovation to all its apartments. Once finished, the rent for a small two-bedroom that is probably 700 square feet will go from $850 to $2,500.
The residents, most of them younger renters, have relocated.
Half of Vancouver’s population rents, and a lot of those renters live in old apartment buildings along arterial roads such as Main Street, or big old houses, carved up into suites.

Prior to Vancouver’s real estate mega-boom, a lot of those rental buildings were undesirable to investors. Now, investors are scooping them up either to tear them down and build anew, or renovate them so they’re almost new. And once they are re-built, those rental apartments at least double in price compared with what existed before at the same location. And yet, as house prices increase, residents are increasingly turning to rentals. If the rentals are going up in price as well, who will be able to afford to live here?

We’re seeing this out-with-the-old, in-with-the-new happening at Marine Gardens on SW Marine Drive, near Cambie, where the 70-unit townhouse village is going to be traded for condo towers that will include 70 units of market-rate rental. The rents in the new building will double. Of course, most people living at Marine Gardens can’t afford a rent hike. They were living at Marine Gardens, which is rundown, because the low rent fell well within their means.

“One of the mantras I’ve heard almost accusingly from city officials is that we have had ‘artificially’ low rents,” says one of the few remaining tenants at the Gardens, Jillian Skeet. “But if you take the median household income for Marpole from the city’s own Marpole Plan, it’s $48,000. And our rents meet the affordability definition that is one-third of income for rent.”

Ms. Skeet has a point. The replacement rentals are beyond the reach of most renters, which is just another facet of Vancouver’s affordability issue. The city may be pushing developers to build more rentals, but what they’re building is of little use to low- to mid-income residents.

“When you have an affordability crisis like we have in Vancouver, the first thing you do is protect your existing stock,” says Ms. Skeet. “It’s not rocket science.”
Protection of existing rental buildings wasn’t among Mayor Gregor Robertson’s recent suggestions. In his publicly released letter to Premier Christy Clark, he calls for a higher property transfer tax on luxury housing and tracking of property ownership. Initially, we’d only heard him suggest a tax on property flipping, which seemed to many like too little, too late. The new suggestions are more confidence-inspiring, although much depends on how the premier’s office responds.

At this point, it could be little more than a rattling of the cage, to appease the growing body of angry residents who are feeling the squeeze.

Whatever the direction taken, most would agree that government needs to stop dithering. Vancouver’s vacancy rate is around zero, the worst in Canada. We already know the unaffordable state of home ownership. The cost of owning a detached bungalow (mortgage payment, utilities, property tax) now requires 82.4 per cent of a typical household’s monthly pretax income, according to the RBC Affordability Report. As Ms. Skeet touched on, it’s a long-held rule that housing becomes unaffordable when it requires more than one-third of household income.
“Our data shows things are going to get worse,” says Tony Roy, executive director of the BC Non-Profit Housing Association.
He gives credit to the city for significantly increasing the supply of rental.

But the provincial and federal governments have to get back into the housing business, considering that half the renters in Vancouver earn less than $41,000 a year.

“I would say for 50 per cent of renters there’s nobody building for that market right now.”
The only way this scenario can play out is that those who are getting squeezed will move on, and that won’t be good for the city, says Avi Friedman, the McGill School of Architecture professor who spoke this week at the Social Purpose Real Estate conference. Dr. Friedman, co-founder of the Affordable Homes Program at McGill, is passionate in his belief that government needs to intervene.

 “There is something fundamentally, economically wrong in making sure that young people will not live in the place where they grew up,” says Dr. Friedman.
He does not buy into the notion that Vancouver’s housing market is at the whim of the free market, and government can only watch from the sidelines.

…to read the entire article click on the link below

http://www.theglobeandmail.com/life/home-and-garden/real-estate/vancouvers-tenants-feeling-the-squeeze-as-rentals-prices-rise/article24830181/

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