Moving out is an exhilarating experience for young people. The thought of decorating a new living space, having privacy and gaining independence can motivate young adults to save up and get out of their parent’s house as soon as they can.
However, while owning property at a young age may have been the standard 40 or more years ago, it isn’t anymore.
In today’s financial climate, buying property as a young adult isn’t an affordable possibility for many. Because of this, most people looking to move out often have to rent instead. More than half of Ontario homes are rented by adults between the ages of 25 to 34, according to a 2018 article from the Homeless Hub.
The difficulty of buying a house or renting an apartment has become an unfortunate reality.
Brittney Arkinson, a 24-year-old with a full-time job, acknowledges that the cost of rent is sky high in places just outside of Toronto such as North York, Richmond Hill and Markham.
“Rent definitely is a challenge. I’ve seen one-bedroom apartments go for $1,500 a month not including utilities or a parking space,” she says.
One major factor that has contributed to the unaffordable renting market is Real Estate Investment Trusts (REITs). According to an article from Investopedia, a REIT is a group or company that handles income-generating real estate. This means that properties under a REIT include spaces like apartment buildings and hotels.
Alan Walks, associate professor of the geography and planning department at the University of Toronto, says that the legislation for REITs in Ontario was introduced in the late 1990s.
“The REIT model is to invest a certain amount in apartment buildings so that you can raise rents and find any loophole you can, so you can squeeze tenants to pay extra for parking and other maintenance fees and funnel money to your investors who buy your shares,” says Walks.
The loopholes and extra costs that come with renting an apartment in urban areas can drastically affect someone’s lifestyle.
Arkinson has seen the effects first-hand. “I’m afraid that I won’t even be able to afford food or the basics of living, like hydro,” she says. “If I find a place that doesn’t even have an ensuite laundry room, I have to travel to wash my clothes which is just another added expense.”
Walks says that one of the reasons why REIT groups buy apartment complexes at a rapid pace is because of the high demand to live in Canada’s urban areas. Gentrifying properties for ownership has left young adults feeling unsure about where they can go if they can only afford to rent.
The renting market wasn’t always like this. Although young adults still lived in cities like Toronto 50 years ago, there was a different approach.
“In the 1970s and 1980s, to make up for the loss of that rental housing, the Ontario government and the city of Toronto built new rental housing,” says Walks. “There were considerable numbers of social housing built by governments. At the time in the 1970s in particular, there were private actors that were building new rental housing.”
The government’s goal was to meet the demand for renting rather than to take advantage of it. There was more supply so the costs of renting were cheaper.
“What’s different now is people can’t find any new rental housing,” says Walks. “So the REITs are capitalizing on the fact that there’s very limited rental housing and so they’re raising their rents,”
Even in the 50s and 60s, gentrifiers were not investing in houses to capitalize on the rising housing prices the way they do now. “They just wanted to live in the city because they thought it was cool,” Walks says.
In order to make the market more affordable and allow more people in the city, Walks says that more rental housing needs to be built across Canada. “That would provide choice not only for young people, but for those who don’t want to take on a mortgage and don’t have the income to be able to take on tons of debt to buy housing.”
The renting market needs to change in order to continue the diversification of Canada. The ‘50s, ‘60s and ‘70s shaped the culture of downtown Toronto into what it is today. To continue shaping the cultural hubs of Canada, reforming the rental market is the next step.