When John Hawker moved to Hamilton 10 years ago, it took him one day to find what he was looking for.

He had simple criteria: a nice apartment within 10-minute walking distance from city hall. As a self-described municipal politics junkie — a "municipaholic," as he puts it — he was tired of Toronto and wanted to move to Hamilton.

He and his wife found their new home on the first day in the form of a two-bedroom apartment at the corner of MacNab and Robinson in the historic Durand neighbourhood.

Hawker loves where he lives, and he can afford it. But he worries that future generations of renters will lose that opportunity.

Hamilton's housing prices are hot — trending ever upward, outpacing the country in a number of recent reports. Some neighbourhoods have seen an increase of 100 per cent in housing prices in the past 10 years. But that hot market for buyers and sellers has another  side: It's impacting the rental market in unique and worrying ways.

Sold: How a hot housing market is changing Hamilton

A four-part series looking at Hamilton’s housing price boom and what it means to the city.

It's getting harder and harder to buy, said Hawker, who is co-chair of the city's tenant advisory committee. That means renters who were on the cusp of home ownership are staying put. But as the city's population grows, there will be nowhere for new renters to live.

Hawker also foresees a trend that he believes has already started. Owners of large houses in neighbourhoods such as Durand often carve them into multiple apartment units. But the more houses in Hamilton fetch, Hawker said, the more lucrative it is for them to be converted back to single-family homes and exit the rental market altogether.

All of this could spell disaster for rental market already bearing the brunt of many of Hamilton's troubles. The city has many low-income residents in precarious employment who need affordable places to live, and the city has precious few of them.

Local reports seem to back up Hawker's fears. A 2012 rental market report from the Canada Mortgage and Housing Corporation shows that the vacancy rate in Hamilton and Burlington's apartment buildings was 3.5 per cent that year.

Widening gap between rents and mortgages

ii-durand-apartment-300

The gap between rents and mortgages is widening

But the report predicted that would drop to three per cent this year "as fewer potential first-time home buyers will make the transition from rental accommodation into home ownership."

The gap between renting and having a mortgage is widening, the report shows. It began to increase sharply in 2009 and has widened to nearly $2,000 per year in 2012. 

There's also plenty of other evidence that the city lacks affordable housing. In 2012, the city's emergency and community services committee produced a report on the issue. It shows that one-fifth of renters spend more than half their income on rent. And 5,700 families are waiting for subsidized housing.

Condo statistics for Hamilton

2003 — 1,098 sold, average price $132,038

2005 — 1,261 sold, average price $154,455

2007 — 1,301 sold, average price $175,865

2009 — 1,164 sold, average price $188,865

2011 — 1,206 sold, average price $201,539

2012 — 1,168 sold, average price $208,195

Source: Realtors Association of Hamilton-Burlington

The report also notes that with the city's projected population growth of 26 per cent by 2031, 629 rental housing units will need to be constructed each year to keep up the pace. Currently, Hawker said, the city produces about one-sixth of that.

Arun Pathak is president of the Hamilton and District Apartment Association, an association that represents landlords city wide. He has similar concerns as Hawker.

"There is definite pressure on renters as house prices go up," Pathak said. "There are multiple factors. One is that homes that could be used for rental units could be sold, thus reducing the rental supply."

Building more condos than apartments

It's long been known that there isn't enough rental housing in the city, said Renee Wetselaar, co-ordinator of Hamilton's Affordable Housing Flagship. 

There hasn't been any real construction of apartments buildings in Hamilton in more than 20 years, she said.

"What we are hearing from people is that there's not enough rental stock that's affordable and appropriate and has been fixed up enough."

Figures from the city show that in the last five years, 485 of the city's 1,264 new units built were condos, and only 138 were apartments. The rest was housing for seniors or students.

Apartment vacancy rates as of October 2012

  • Hamilton: 3.5 per cent
  • Toronto: 1.7
  • Brantford: 3.5
  • Montreal: 2.8
  • Ottawa: 2.5
  • St. Catharines-Niagara: 4
  • Windsor: 7.3
  • Halifax: 3

Source: Canadian Mortage and Housing Corporation 2012 Rental Market Report

It's a problem that is largely due to the fact that constructing purpose-built rental apartments is far more costly than building condos, said Mathieu Langelier, executive officer with the Hamilton Halton Home Builders' Association (HHHBA).

The trouble with apartments

Unlike condos, where the money from the pre-sale of units can be used as collateral to fund the project, apartment developments need to find other ways to provide the cash to build the project, he said.

"The financing (for rental properties) is very, very hard to secure," he said. "You need to put aside a tonne of money for a long time and it's not the same yield you get as building condos."

Larry Huibers, executive director of the Housing Help Centre of Hamilton, worries that as property values increase in the city, the cost of rental units will too.

"It's making existing stock more valuable, so it can bear a higher cost, so rents are continuing to go up, at least to the maximum allowable," Huibers said.

Local housing experts all have various ideas on how to ease the coming crunch. Pathak worries about the city's plan to implement a bylaw requiring rental units pay an annual licensing fee and meet a new set of standards, which he says could coax more landlords to convert their homes back to single-family residences. The city's planning committee will deal with the issue again on Sept. 17.

Need for a strategy

Hawker and Wetselaar both want the federal government to implement a national housing strategy, which would see more money flowing from the feds down through to municipalities to create more affordable housing.

"People are crying out for a national housing strategy that would address these things on a macro level," Wetselaar said.

Hawker wants developers, politicians and others benefiting from Hamilton's housing boom to remember the renters.

Renters run the gamut — urbanites, professionals, recent post-secondary graduates, and people who want flexibility, he said. And he wants Hamilton to keep all of them.

"We just don't know where this is going to go."