Rental demand in Hamilton outpaced supply in 2021: CMHC
The number of Hamilton apartment units available for rent hit a 30-year high in 2021 - but landing one remained difficult and costly, according to a new rental market report from the Canada Mortgage and Housing Corporation (CMHC).
The annual report, released Friday, showed the city's rental demand far outpaced its rental supply last year, a trend the corporation attributed to less first-time homebuyers and more newcomers.
While the number of new apartments up for rent in Hamilton increased by nearly 900 units from October 2020 to October 2021, rental demand jumped by roughly 1,200 units, leaving prospective tenants with scarce housing options.
In Hamilton, you haven't seen a lot of supply growth in recent years, so last year was an outlier," said CMHC senior analyst Anthony Passarelli. But demand still eclipsed supply. Even though there was a large number of apartments added to the supply, there was more renters than apartments."
The supply and demand imbalance resulted in the city's vacancy rate falling for the third consecutive year to 2.8 per cent - down from 3.5 per cent in 2020 and 3.9 per cent in 2019.
Besides a shortage of options, prospective renters in Hamilton also faced financial challenges, according to the report.
Vacant one-bedroom units were offered at a monthly average of $1,238 in 2021 - nine per cent higher than the rent paid for occupied units - and two-bedroom units went for a monthly average of $1,502 - nearly 11 per cent higher than occupied units.
Passarelli said the sharp increase in Hamilton's rental demand could be boiled down to a couple of factors.
For one, fewer renters transitioned into home ownership because they were priced-out of qualifying for a mortgage. At the same time, average resale home prices jumped more than 20 per cent.
If you were rental looking to buy a home, it was difficult. A lot of renters had to stay renters, and the ones that were considering to buy were unable to buy," said Passarelli.
Passarelli said another reason for the supply and demand crunch stems from international and domestic migration.
A decrease in vacancy rates in west Hamilton suggests an influx McMaster students returned to the city with the intention of renting, according to the report. There were also more than 5,000 newcomers - a demographic who Passarelli said are far more likely to rent than own their first home - who moved to Hamilton in 2021, up from 3,000 a year prior. And there's the wave of domestic migrants hailing from more expensive markets in the Greater Toronto Area.
Sebastian Bron is a reporter at The Spectator. sbron@thespec.com