Rental vacancy rates dip in eastern Ontario. This 'bold' regional plan could help

Rental vacancy rates in much of eastern Ontario were down in 2022 compared to 2021, a product of new supply not keeping up with demand,migration and rising home prices keeping renters from buying homes.

The vacancy rate in Ottawa's rental market dropped from 3.4 per cent in 2021 to 2.1 per cent in 2022, according to the latest rental market survey from the Canada Mortgage and Housing Corporation (CMHC).

Lukas Jasmin-Tucci, an economist withCMHC andmarket analyst for Ottawa and Gatineau, Que., said that in the last two yearsthe vacancy rate was artificially higher because of the pandemic.

"Now at 2.1 [per cent], it's closer to what we were used to before the pandemic," he said on CBC Radio'sAll In ADay Monday.

"Migration has a lot to do with that decrease."

Migration was spurred by the return of students. Areas like Sandy Hill and Lowertownnear the University of Ottawa saw a drop from 5.3 per cent to 2.1 per cent, for example.

The Glebe and Old Ottawa South, next to Carleton University, havea vacancy rate of just 0.7 per cent while the downtown area has a rate of 1.3 per cent.

As vacancy rates have gone down,rents have risen, with the average cost of a two-bedroom apartment up 4.8 per cent.

Jasmin-Tucci said the resale market also affected rental ratesbecause people weren't able to buy homes due to the sharp increase in prices.

"That's another additional pressure on the rental market which lowers the vacancy rate."

A plan for eastern Ontario

Peter Emon,chair of the Eastern Ontario Wardens' Caucus and warden of the County of Renfrew, said the wait-list for rent-geared-to-income or affordable housing in the 55,000 square kilometres the caucus represents is five to 10 years.

He said growth in the area population went up 5.8 per cent between 2016 and 2021 has outpaced supply, causing rents to go up. As well, 48,000 people in the region are spending more than 30 per cent of their income on housing.

The caucus has developed a plan to meet this that involves building 7,000 community housing units over seven years.

By doing it regionally, rather than piecemeal between 103 rural municipalities, Emon saidit will be cheaperwith an estimated cost of $3.1 billion.

Emon said the work would require money from all levels of government, but the early reactions have been positive.

"We've had a good response from the provincial government and the opposition parties," he said on All In A Day Tuesday.

"They think it's bold, I think it's innovative and they think it'll work. So now it's a matter of putting the details together."

10% increase in average Gatineau rent

In Gatineau, migration drove the already-low vacancy rate even furtherfrom 1.1 per cent to 0.8per cent,according to Jasmin-Tucci.

"We have an increase in supply, but it's still not enough forthe rapid increase in demand," he said.

With demand that strong, he said, an "acceleration ofthe building in the rental market," will be necessary.

Gatineau saw a 10 per cent increase in theaverage two-bedroom rent, which is a record the highest since CMHC started its survey in 1990, Jasmin-Tucci said.

Olga Golozub, an economist with CMHCand market analyst for Belleville and Kingston, Ont., said "tight market conditions"remained in Kingstondespite a large expansion of available rentals.

In 2021, the city added 276 unitsand another 405 came into the rental market in 2022, Golozub said.

"This is good news for Kingston, a kind of solid accomplishment," she said.

"But there is bad news, that the pace of rental construction was not enough to meet ever-growing demand."

In Belleville, the vacancy rate increased to 2.4 per cent from 1.7 per cent, but remained well below its 10-year average of 3.3 per cent.