Splitting the rent with a roommate has long been one way to make living in a major city more affordable. But even as asking rents fall across most of Canada’s major rental markets, that may still not be enough. 

An iPolitics analysis found average asking rents for a two-bedroom fell year-over-year in six of seven major cities examined. But half the cost of a two-bedroom would still eat up nearly 39 per cent of the median individual income in Vancouver and 36 per cent in Toronto, compared with about 20 per cent in Edmonton. 

Between 2001 and 2021, roommate households were the fastest-growing household type in Canada, having increased by 54 per cent – it rose 14 per cent in 2016 alone, according to Statistics Canada.

The analysis compared average asking rents for two-bedroom apartments with median individual incomes, vacancy rates and year-over-year changes in asking rent across seven cities: Toronto, Vancouver, Ottawa/Gatineau, Edmonton, Calgary, Montreal and Winnipeg.

The analysis used the latest data from Statistics Canada and the Canada Mortgage and Housing Corporation. 

While the rental markets seem to move in favour for renters, following years of steep increases, housing experts say greater availability has not necessarily translated into affordability.  

Tania Bourassa-Ochoa, Deputy Chief Economist at CMHC, said asking rents have declined and vacancy rates have risen over the past year, but much of that relief has been concentrated in newer, more expensive units. 

“Even if asking rents are coming down, that doesn’t mean that all of a sudden they’re affordable,” Bourassa-Ochoa said in an interview with iPolitics.

The shift is largely a supply and demand story. A record number of rental units have come online following efforts by all levels of government to accelerate construction, while population growth has slowed, partly due to lower immigration targets and fewer international students and temporary residents. 

BACKGROUND: Will ‘Build Canada Homes’ move the needle in affordable homes? 

Available, not affordable 

In Toronto and Vancouver, another sources of rental supply is coming from the condo market, Bourassa-Ochoa said.

“Condominium investors who were not able to sell their units because of a weaker ownership market have also entered the rental market, and so that contributed to more supply,” she said. 

High housing costs are also changing how young Canadians live. Bourassa-Ochoa said household formation has slowed as young adults opt to stay with their parents longer or “double up” with roommates rather than renting a place of their own.

That, in turn, further softened rental demand. 

Considering an increase in housing supply and softer demand, it has also pushed vacancy rates higher. This would give renters more choice and room to bargain rental prices, but the headline vacancy rate still mask a significant divide in the market. 

For example, despite Vancouver’s overall vacancy rate of 3.7 per cent, it remained the least affordable of the seven cities analyzed.

Bourassa-Ochoa said vacancies in Vancouver are more heavily concentrated in newer buildings and suburban units, while only one to two per cent of units affordable to lower-income households were vacant.

The glut at the higher end of the market has also forced some landlords to compete more aggressively for tenants, like offering one, two or even three months of free rent, Bourassa-Ochoa said, but it’s not necessarily targeting tenants who may have a lower income.

Mike Moffatt, housing expert and founding director of the Missing Middle Initiative, added rents can also be slow to adjust downward as landlords may be reluctant to significantly cut their asking price, particularly if they expect the softer market to be temporary. 

While renters in Vancouver face plenty of expensive options, the picture looks different in Edmonton.

Of the seven cities analyzed, Edmonton emerged as the most affordable for a median-income renter sharing a two-bedroom, with their half of the average asking rent equivalent to roughly 20 per cent of their income. 

Moffatt said Edmonton’s relative affordability is consistent with the broader divide between Western Canada’s rental markets and those in Ontario and British Columbia. 

Aside from crediting the province for having a “strong economy,” Moffatt explained the numbers are also due to faster municipal approvals, lower land costs and Edmonton’s willingness to allow denser forms of housing such as multiplexes. 

“I would say overall, Alberta has done better than most when it comes to keeping rents affordable relative to income,” he said. 

Looking forward 

Bourassa-Ochoa said renters could have more options, as rental housing under construction slowly enter the market in the coming months.

“With that in mind, that vacancy rates will continue to increase over the next year or so,” she said.

With many young adults staying with their parents longer or sharing homes with roommates, Bourassa-Ochoa added the next test will be whether greater availability actually makes housing affordable enough for them to live independently.