York Region has ‘one of lowest’ rental market supplies in GTA

Paul Freeman, York Region's chief planner, says only “about 14% of total housing stock is rental.”

Yorkregion.com
October 19, 2018
Diana Al-Shibeeb

As affordable housing continues to be a staple part of many discussions, especially for millennials, York Region, a haven for some escaping Toronto’s soaring real estate prices, has one stumbling block.

The “main challenge” is that York Region has “one of the lowest” supplies of rental market in the Greater Toronto Area, its chief planner says.

“Currently, we have one of the lowest percentages in the GTA,” Freeman, who is head of the region’s planning and economic development and corporate services, said during an interview about the reasons behind the lack of affordability of homes at least not for the big earners.

“About 14 per cent of total housing stock is rental,” Freeman, who was appointed this April, spoke about the meagre supply of affordable rental units.

Sharing more figures, Freeman said: “We estimated that about 30 per cent of our rental stock is purpose built, and about half of that is non-profit or government-assisted.”

On the flip side, the secondary market, where lenders and investors meet to bring on shear market forces, is behind “70 per cent of the rental stock,” making prices not so accommodating to those who are on the mid-to-lower incomes.

Mid-incomers range from those who earn $80 thousand up to $120 thousand annually.

Is there enough land?

Jeff Leary, a Mississauga-based real estate broker, said that the main reason behind the housing affordability dilemma in GTA or York Region is the lack of enough land amid a non-stop population growth, spelling accelerated demand for homes.

Leary also highlighted how in 2005, the Greenbelt Act was enacted to preserve over two-million acres of land protected by the Niagara Escarpment Plan, the Oak Ridges Moraine Conservation Plan and the Greenbelt Plan, making land even more scarce.

This shortage of supply and population growth probably explains why despite Canada’s Central Bank toughening rules in May about who is eligible for mortgages, homes sales continued to rebound at least for GTA area by 8.5 per cent in August, when compared with a year ago.

Freeman, however, dispels this argument, saying it is more of a demand and not a supply issue.

“We have quite a years-of-supply, about 21 to 23 years' supply of lands, designated,” said Freeman. “So we don’t see it as much of a supply issue over all, it is really the rental.”

“There are also a number of demand-based factors that we believe are contributing to the increase in the housing prices, the lack of the rental supply from our perspective is the one of the main issues,” he added.

Challenges to the plan

Luckily, the region is not left to its own devices with no backup. In 2014, the York Region approved a 10-Year Housing Plan, requiring 35 per cent of the new housings in key areas to be affordable while 25 per cent of new homes on the outskirts to be also budget-friendly.

Asked about the progress of the plan so far, Freeman said: “What we are finding is that we do meet our targets but we are mainly meeting those with small condominium units. What we need is more family-sized units in the region and the ability for rentals to accommodate mid and lower incomes that achieve better affordability.”

A shortage in the rental supply is mainly due to the “high price of land,” making developers “favour building condominium units.”

To lure developers and compensate for the high prices of land, the municipality started with tools such as “a development charge deferrals,” where “charges are deferred for a period of three years” as well as incentives to include “tax increment equivalent grant,” a form of financial assistance equal to all or a portion of the municipal property tax increase within the community improvement area.

But there are more incentives in the works for York Region to stimulate a rental supply market.

“We are also looking for deferrals of application fees,” Freeman said. “We are working with the development industry and the local municipal partners to develop these tools as financial incentives to encourage the development of purpose-built rental.”

The chief planner said, “One of the other tools is inclusionary zones.”

“Our local municipalities can enact a zoning bylaw that’s inclusionary zoning, which requires a certain percentages of units within the development to be affordable. So our local municipalities are working on that to hopefully enact those bylaws,” he explained. “We are working with them to establish a level playing field across all nine of our municipalities.”

Upcoming projects

Like Freeman, Katherine Chislett, who is York Region’s commissioner of Community and Health Services, said in the interview: “We use a lot of planning and incentive tools to spike the private sector market to bring on rental supplies, and the region is also investing into actually building rental housing, and this is primarily of course for people, who are in need of affordable housing.”

Next year, a 160-unit building will be officially open in Woodbridge Lane, Vaughan. 

“It is going to be mixed, for families, for seniors, for singles. It is a beautiful property, again we had investment from both federal and provincial governments but for the most part from the regional government,” she said.

Another project for 2021-2022 is also on the horizon in Markham.

“That’s going to be 260 apartments for seniors,” she said, adding, "What’s really interesting about this project is that we actually building community hubs as well.”

So far, Freeman said: “We have recently completed in Newmarket what’s known as the 212 Davis, which is a 40-storey apartment building that is all 100 per cent rental.”

On the backdrop of York Region growing by approximately 19,700 people, accounting for 17 per cent of Greater Toronto and Hamilton Area area last year, the Provincial Growth Plan calls for the region's population to grow to 1.8 million in 2041.

This population growth explains why “Vaughan, which used to be house, house, house” now is witnessing the building of “condo, condo and condo,” said Leary, whose sentiment is not only reflective of what’s happening on ground but also a challenge to the region to tackle.