Bidding wars, cutthroat viewings and onerous applications: Stories of Canada’s red-hot rental market

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Weeks into his search, Oliver South is wondering how long he’ll have to look before he finally lands a place to live during the last year of his undergraduate degree.

The mechanical engineering student, who attends the University of British Columbia in Vancouver, has reached out to about 35 different people who’ve listed rooms for rent. About half don’t respond, he said. The other half make it clear he’s up against stiff competition.

One person raised the listing price by $100 a month in the middle of the conversation, according to messages Mr. South shared with The Globe and Mail. Another person, subletting a unit rented and managed by UBC, never listed a price at all, inviting a furious bidding war for a coveted room on campus that’s walking distance from class.

Ultimately, the asking price reached at least $1,750 a month, more than 80 per cent higher than what the university charges the original tenant.

“I know it’s way above the price but it seems like people are willing to pay that much and it’s hard for me to say no to that,” the sublessor wrote in messages to Mr. South that he shared with The Globe and posted on Twitter. “So yes that’s the current offer I have if you wanna beat that.”

When reached for comment, UBC said in a statement it cannot stop students from subletting its units above the original rate, as the university isn’t a party to those agreements. However, the university said sublet agreements must meet certain requirements and it approves “very few” sublets during the academic year.

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Mr. South tried to bargain with the person to no avail. Based on other listings for similar units, he said he wouldn’t be surprised if the price went up after he bowed out.

“That’s just the market right now,” he said.

And it’s not just the case in Vancouver, where calls for affordable housing have echoed for years. Across Canada, renters searching for a home are wrestling with a red-hot market in which competition is fierce, prices seem to rise in real time, and landlords, in the words of Mr. South, “hold all the cards.”

A confluence of factors are to blame for the spike in rental demand. Chief among them are fast-rising interest rates, according to Shaun Hildebrand, president of Urbanation Inc., a Toronto-based real estate research firm. As those rates have cooled home sales and made it more difficult to qualify for a mortgage, many prospective buyers have been trapped in a rental market that’s already short on supply.

Meanwhile, record-low unemployment, renewed immigration and a return to the office and classroom – all benchmarks of Canada’s recovery from COVID-19 – have further expanded the pool of renters after a lull in rental demand during the early days of the pandemic.

In July, the average monthly rent in Canada had risen by 10.4 per cent – to $1,934 – compared with the same time last year, according to a report by Rentals.ca. However, some cities have seen costs surge well above the national average over the past 12 months.

In Victoria, rents for all property types reached an average of $2,667 in July – a 27-per-cent increase from the year before. Hamilton, Kitchener, Ont., Toronto, London, Ont., and Burnaby, B.C., all followed close behind, with rents increasing by roughly a quarter over the previous year in each city.

Meanwhile, in Vancouver, the average rent in July was 16 per cent higher than a year earlier, sitting at just under $3,118 a month, the most expensive rent, on average, in the country.

In Calgary, that figure jumped to $1,797 in July, an increase of 18 per cent. That’s due in large part to a strong return of international and interprovincial immigration, according to Michael Mak, a senior analyst at the Canada Mortgage and Housing Corp.

And in Toronto, the average rent for all residential property types rose to $2,691 in July, nearly 24 per cent higher than that month last year.

An Urbanation report last month found rents in the Greater Toronto Area had risen at the fastest pace on record in the second quarter of this year. At the time, Urbanation said the GTA’s vacancy rate sat at 1.4 per cent, down from around 5 per cent a year ago.

That comes as no surprise to Julia Belittchenko. She and her partner have been searching for a new home “anywhere along a commuting line” in Toronto since June. She estimates they’ve contacted more than 200 places.

“It’s very, very discouraging,” said the 25-year-old, who’s an academic administrator at a camp for international students.

“I’m working a full-time job, and then […] any free second I have, I’m doing my other full-time job of finding a place to live. I am constantly on every single site looking.”

So far, affordability and unprecedented competition have been her biggest challenges, Ms. Belittchenko said. After three different viewings, within minutes, she was informed that each place had been snatched up.

The expectations of landlords also seem to have gone up, she said. On top of providing recent pay stubs and multiple references, many landlords are now requiring credit reports, co-signers, employer contact information, photo identification and, for university students, proof of enrolment.

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The rental market is beginning to feel like a lottery, said Tessa, a Vancouver woman in her 30s. (The Globe is not identifying her or using her real name so she could speak candidly about her apartment search.)

A few weeks ago, she arrived to a viewing with nearly 25 people waiting outside the place. When the crowd learned they’d be shown the apartment in small groups, some began fighting to get ahead.

The others swapped war stories. One young woman carrying a laminated calling card said she’d been on the hunt for three months. By the time she arrived to one viewing, the woman said, the listing price had suddenly jumped by $300.

Last week, Tessa thought she may have found a place, though she wasn’t sure whether she could afford it. Until it fell through, she was willing to spend hundreds of dollars more a month than she had originally budgeted. Due to the impact her search has had on her mental health, she felt like she couldn’t afford to keep looking.

When might Canadian renters get some relief?

In the short term, Mr. Hildebrand and Mr. Mak both agree a recession is the likeliest way rents will decline, or at least stop rising.

However, in the long run, Canada needs significantly more rental development to lessen the gap between supply and demand. And due to the rising cost of financing, construction materials and labour, it’s up to governments to introduce more incentives for purpose-built rental construction, Mr. Hildebrand said.

But Dr. Penny Gurstein, director of UBC’s Housing Research Collaborative, insists only the right kind of supply will address the country’s housing crisis.

Much of the rental stock built today is far too expensive for many renters, she said. Dr. Gurstein believes community land trusts, in which a non-profit group owns and maintains property on behalf of a local community in order to provide affordable housing, could be one solution. The situation is dire, and governments must innovate if they want to see meaningful progress, she said.

It’s become much more difficult for young people to leave home, Dr. Gurstein noted. Mr. South, Ms. Belittchenko and Tessa can attest – they’re all currently living with their parents, despite their best efforts to move out. The same goes for one of Dr. Gurstein’s close relatives.

That reality portends something much darker, she said, hampering not only an individual’s ability to blossom, but also the vibrancy and culture young people offer neighbourhoods.

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