The rental market in Hamilton is as tough today as it has been in two decades with those seeking accommodation facing some of the lowest vacancy rates, rising prices and dwindling affordability, according to Canada’s housing agency.
Canada Mortgage and Housing Corp.’s latest annual rental market report revealed the vacancy rate in the city’s purpose-built rental housing dropped to just 1.9 per cent in 2022 — the lowest since 2002.
Hamilton is on par with Canada’s national vacancy rate for purpose-built rental apartments which also declined to 1.9 per cent last year — the lowest level since 2001.
Additional strain on Hamilton renters in 2022 was generally connected with the number units in the city occupied by student renters, higher full-time employment, and fewer renters transitioning to homeownership.
“Average rent growth for 2-bedroom apartments was stronger this year at 5.3%, due to fewer vacancies and a higher Ontario rent increase guideline,” the CHMC report said.
Two-bedroom units provided the most competition among renters last year, according to CHMC Senior Analyst for Hamilton, Halton and Peel Regions Anthony Passarelli.
Those looking at a two-bedroom unit, being turned over to a new tenant, paid about 26 per cent more year over with the average rent checking in at about $1,679 per month.
“And that’s a function of there being such strong competition for those small number of units that get put back on the market” Passarelli revealed.
Those opting for a condominium-style rental had it tough with the vacancy rate below 0.5 per cent for a fourth consecutive year. Renters of those units can expect to pay $500–$600 more per month compared to a purpose-built rental apartment.
The annual study also suggests increases in rents grew disproportionately to the incomes of the average Hamiltonian living in the metropolitan area (CMA), creating few affordable options for those looking for middle-income rentals.
With full-time employment up year over year by more than 10 per cent with those aged 25 to 44 and five per cent with those 15 and 24, the gains contributed to more individuals seeking rentals in the city as a whole.
Only 12 per cent of vacant units were estimated to be affordable to renters at the 40th income percentile of $46,000. Most vacant units were only affordable to renters with a yearly income of $65,000 or greater, according to the report.
Accommodations near McMaster University got tougher year over year as the return to in-person learning for the 2022 fall semester dropped more student renters in zones around the learning facility’s main campus.
The increase is attributed to a province-wide increase in temporary residents in Ontario on a study permit.
With rising interest rates contributing to a tight market for home ownership in Hamilton, the CHMC revealed fewer renters made the jump to homeownership.
Passarelli told 900 CHML’s Bill Kelly Show that sharply rising mortgage rates gave renters fewer affordable homeownership options, despite house prices trending lower.
“So it’s very difficult to qualify for that mortgage with the rate increases that have occurred,” Passaelli said.
“That’s even with the prices trending down over the past six to eight months, it’s still become more difficult to get into homeownership because of those rate increases.”
He says the prospective positive news for renters is more purpose built rentals being built in and around the city which could alleviate current issues somewhat.
“Plus, you got the condominium stock and CMHC data shows about one out of every three to four … of the new condominiums end up being rented out,” Passarelli said.
Rental trends in Niagara region, including St. Catharines, went in a different direction, with rental supply outpacing demand.
The vacancy rate for purpose-built rental apartments grew to 2.8 per cent in October 2022, up from the 1.9 per cent reported in October 2021.
However, the number of affordable rental options in the region declined with more tenants staying put as the costs of changing rental accommodations increased.