Rents Always Go Up!

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By now we’ve all heard the famous quip thrown around by an online celebrity talking about equity markets in the United States: “stonks always go up!” Although it’s not true when talking about individual stocks, it’s definitely true when talking about broad-based indices such as the S&P500, at least over multi-year periods.

There has been much discussion in Ontario about the effects of the global pandemic on the province’s rental housing industry in 2020, with some people insisting the pandemic has softened demand and rents in Toronto in particular, and others (including me) asserting that the industry hasn’t been impacted much. Just like with the stock market, both views can be correct. In other words, demand and rents softened in individual buildings in 2020, while rents increased in aggregate in 2020.

The chart below shows average rents for all purpose-built rentals for all unit types (number of bedrooms) for southern Ontario’s twenty largest cities from 2000 to 2020, as reported by CMHC.

The chart shows that aside from Windsor, which suffered flat average rents for a decade from around 2003 to 2013, average rents have gone up over the past twenty years. Although some cities saw small year to year fluctuations in average rents, notably Richmond Hill and Markham, due most likely to minor inconsistencies in CMHC’s data gathering, the long-term trend is ever upwards. So, in summary, it’s clear that stonks… err, rents… always go up!