Erik Eastmure, 24, loves his job as a cook in an up-and-coming Riverdale eatery. He is less enamoured with spending half his monthly take-home pay, about $1,000, on rent and utilities for a house he shares with two roommates.
Eastmure earns $16 an hour plus tips — a decent wage in the food service industry, he says. But it isn’t enough in Toronto to buy him the privacy he craves and, after rent, groceries and other essentials, there isn’t a lot left to enjoy the city, buy clothes or even visit to the dentist.
“There are things I want to buy,” he says. “My laptop just broke; I don’t know how I’m going to afford a new laptop.”
He’s among the quarter of Canadians who earn within $3 of their provincial minimum wage. In Ontario, that’s $14 an hour.
A new report by the Canadian Centre for Policy Alternatives (CCPA) shows the breadth of the country’s rental crisis for full-time (40 hours a week) minimum-wage earners. This crisis, the study’s author says, stems largely from a dearth of new purpose-built rentals since the early 1990s, when the federal government stopped providing tax credits to build them.
The study found that a one-bedroom apartment would be affordable to full-time minimum-wage workers in only 70 of 795 Canadian neighbourhoods. A two-bedroom rental would be unaffordable in all but 24 of those neighbourhoods; that’s 3 per cent. With the exception of St. Catharines and Sudbury, all the affordable neighbourhoods were located in smaller Quebec cities.
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In Toronto, it’s worse. Workers need to earn about $34 an hour on average to afford a two-bedroom apartment — the kind of space the CCPA says provides modest accommodation for different types of households.
The study, Unaccommodating: Housing Rental Wage in Canada, is based on October 2018 rents and wages and defines affordable as no more than 30 per cent of before-tax income spent on housing. It uses an average rent of $1,440 for a one-bedroom unit in the Toronto area and $1,750 for a two-bedroom apartment, based on rates for condos and purpose-built rentals. Those averages include both occupied and unoccupied units, so a new renter would likely face substantially higher costs.
CCPA researcher David Macdonald calls the 30 per cent measure a Canadian standard that accounts for other life expenses, “including taxes and everything else you’ve got to buy — diapers, transit and so forth.”
The Ottawa research group focused on two-bedroom units, which comprise about half of all apartments in Canada. In Toronto, one- and two-bedroom apartments each comprise 42 per cent of the total units. Studios and three-bedrooms make up the rest.
“A sole income earner working full time should be able to afford a modest two-bedroom apartment for their family in a country as rich as Canada,” says the report. “But in most Canadian cities, including Canada’s largest metropolitan areas of Toronto and Vancouver, there are no neighbourhoods where it is possible to afford a one- or two-bedroom unit on a single minimum wage.”
Among the study’s most alarming findings:
- In 31 of 36 Canadian metropolitan areas, there are no neighbourhoods where two-bedroom apartments are affordable to minimum-wage earners. Only 13 had affordable one-bedroom units.
- A minimum-wage earner would have to work 96 hours a week to afford a two-bedroom apartment in Toronto — more than two full-time jobs. In Vancouver, they would need to work 112 hours a week.
- Toronto had the second-highest wage requirement for a two-bedroom apartment. A tenant would need to earn $33.70 an hour in order to keep rent within 30 per cent of their earnings. Vancouver was slightly worse, requiring a $35.43 an hour wage, followed by Victoria, Calgary and Ottawa.
- On average, a Canadian worker needs to earn $20.20 an hour to afford a one-bedroom apartment. That is well above the highest provincial minimum wage, which is $15 an hour in Alberta.
While none of Toronto’s 117 neighbourhoods is affordable for a minimum-wage earner, a fifth of Montreal’s 97 neighbourhoods have one-bedroom units within reach of those workers. There were, however, no affordable two-bedroom units there either. Workers earning $15 an hour — $3 above the 2018 minimum wage in Montreal — could afford to rent a two-bedroom apartment in about half the city’s neighbourhoods.
Montreal has a greater concentration of purpose-built rentals than Toronto, Macdonald explained.
“There are two (Montreal) neighbourhoods with 40,000 units each of rental housing. The best you can do in Toronto is 10,000 units per neighbourhood,” he said.
The three Toronto-area neighbourhoods with the most rentals, including condos, are Downsview, Mount Pleasant West and Mississauga Centre. But none of them is especially affordable, requiring a $28- to $43-per-hour wage — or at least 80 hours a week of work at minimum wage — for a two-bedroom unit.
The study found the most affordable Toronto-area neighbourhoods in Scarborough would require a tenant to earn between $23 and $25 an hour, and they don’t have a lot of apartments.
Renters like Eastmure can barely dream of home ownership. Even staying in the city seems unsustainable, he said.
“I’ve always just considered myself lucky enough to have an apartment. I know there are people a lot worse than me,” said Eastmure.
But, he said, “With the cost of living in the city, I just don’t think I can be here long term.”
Macdonald hopes the study raises the profile of the third of Canadians who rent ahead of the fall federal election.
“It’s not purely about trying to get millennials into houses,” he said.
Boosting the supply of rentals requires public policy, he argued. Left on its own, the market will build small condos for investors.
“That’s not good for people trying to live and work in Toronto but it is good for investors, whether they’re Canadian or whether they’re foreign,” said Macdonald.
The combined effect of provincial and federal programs is starting to renew the supply of affordable rental and purpose-built rental homes, he said.
“We’ve reached a new high-water mark since 1993 with just over 15,000 new affordable housing units (a year),” said Macdonald, adding that it is still fewer than the 20,000 units a year of affordable housing that was built in the 1970s and 1980s.
“Since the (Conservative Brian) Mulroney government in the early 1990s basically cut the entire Canada Mortgage and Housing Corp. affordable-housing budget, it’s never really recovered,” he said.
The CCPA study is the latest to assess the Toronto region’s housing affordability challenges. A recently published Toronto Star analysis showed that the typical median-income family cannot afford to own a median-priced single-family home in any of 140 city neighbourhoods. It found that even the least expensive real estate in Mount Dennis requires a household income of more than $100,000 to qualify for a $616,500 home.
An analysis by the Toronto Region Board of Trade last month showed that even paramedics and construction workers earning middle-income wages in the $80,000 to $90,000 range were struggling to afford a home.
The Advocacy Centre for Tenants Ontario reported last year that 46.9 per cent of Toronto tenants pay more than 30 per cent of their income on rent.
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With files from Emily Mathieu
Tess Kalinowski is a Toronto-based reporter covering real estate. Follow her on Twitter: @tesskalinowski