Renters in Toronto are really missing the city’s pandemic-era pricing, when we had it good with cheaper apartments than elsewhere in the GTA, landlords offering free rent and other perks, and rates lower than we’d seen in years.
As we get further from that heydey, the city’s cost of living has shot back up to preposterous levels, with it now running tenants about $2,600 per month for a one bedroom unit, and $1,30o just to nab a room in a shared apartment with a roommate.
— blogTO (@blogTO) August 10, 2023
Part of this is inflation, including ever-higher interest rates that have small landlords scrambling to pay their own bills, and jacking up rents as much as they can as a result, or becoming renters themselves and adding additional demand to an already-squeezed market.
Another factor that some are now pointing to is the vast number of short-term rentals in the city, with Airbnb having to issue a statement asserting there is “no proof” it is at all at fault for the skyrocketing price of housing in Canada.
But, research has shown that when a city gets more short-term rental listings, rent prices for those who live there do in fact spike.
This is insane, totally out of control
— Tweet Tweet (@tweet_tweet_69x) August 2, 2023
As one piece in the Harvard Business Review says, the convenience and earning potential of short-term rentals can cause some landlords “to switch their properties from long-term rentals aimed at local residents, to short-term rentals aimed at visitors.”
That study found that a one per cent increase in Airbnb listings in any given locale is causally associated with a 0.018 per cent increase in rental rates and a 0.026 per cent increase in house prices — which adds up quickly when the number of Airbnb listings increases by about 44 per cent each year.
A more local analysis found the numbers were even worse here in Toronto, with long-term rent rates jumping 0.09 per cent for each one per cent rise in Airbnb listings per square kilometre.
The piece, published in The Conversation this month, explains how the platform is indeed leading to a smaller pool of units for actual residents, which drives prices up (by 3.1 per cent for each 10 per cent loss in available units), and is also causing neighbourhoods to become more gentrified, having the same effect on the cost of housing and living in general.
A study of Toronto’s rental market and Airbnb listings by @DeGrooteBiz researcher Iman Sadeghi found Airbnb is reducing the supply of available long-term rentals, and fuelling the gentrification of neighbourhoods. https://t.co/lKG5b22I5C
— McMaster Media (@McMasterMedia) August 14, 2023
The proliferation of short-term rentals also prompts big developers and their investors to make new builds more Airbnb-friendly, if not completely target potential Airbnb hosts as buyers by design — so much so that trying to cut down on Airbnbs in a city can actually paralyze new housing development.
While an influx of tourists inevitably brings financial gain to the city, it’s clear that there are some very detrimental impacts of permitting the short-term rental industry to have such a hold on the city, which is likely to only get worse.
RE/MAX Realtron Realty Inc., Brokerage via Strata.ca