Defining Affordable Housing in Waterloo

Written By: Natasha Kozak

The rental market is no stranger to the students of Waterloo, Ontario. Everywhere you look there are “for rent” signs in windows, and major housing corporations seem to be taking over, as there seem to be more high-rise student apartment buildings than geese on UW campus. Increasing availability of student housing is a positive thing, as it gives more options for incoming students. However, even though supply of housing is increasing, rental prices are increasing as well. How is this so? Given the basics of supply and demand this phenomenon seems to defy economics. In this article we will look at the discrepancy in rental rates between landlords and tenants and tenant sublets. We will then explore reasons for this discrepancy, and pinpoint who is absorbing the deadweight loss (which, as any student of economics would know, is a less-than-pareto optimal position in which to be).

According to the 2020 report from the Canadian Mortgage and Housing Corporation1, supply of new housing has increased every year from 2012 to 2018. During this time the vacancy rate has remained below 3%. But why? The highest density area in KW is Waterloo City, which contains both Wilfrid Laurier University and the University of Waterloo. Given the high student population, could this consistent increase in demand be coming from more students moving to the city? It turns out that between the two universities within Waterloo, enrollment has remained relatively constant at around 59,000 students(2,3). Rather than the demand coming from students, the study suggests the population increase is coming from young professionals aged 25-34. This, coupled with the fact rent has been rising by 5% per year in the KW area, suggests that young professionals are taking advantage of the supply of student housing, pushing down vacancy rates and increasing prices.

Affordable housing is defined by the Canadian Mortgage and Housing Corporation as housing that does not cost more than 30% of yearly income. The average income of a full-time student comes from their summer job. At Waterloo, the average co-op term for an arts student pays $20.72 an hour(4). With a summer job or co-op term at $20.72/hour x 40hr/week x 16 weeks/term, the average arts student is making around $13,000. A third of this, $4,500 for simplicity’s sake, equals $375 a month. Any student would read this laughing. The average price of a student rental in Waterloo is $601 a month(5). By definition, “affordable” housing is not an option for students. At $601 a month x 12 months, students are paying $7,200 a year for housing, which is more than half their estimated yearly income. This expense, combined with tuition and general living expenses, can easily exceed a student’s yearly income, introducing the need for full-time students to take on part-time jobs, or the need for parental assistance.

The reason I have calculated rent on a year long basis, is that many students enter four-year leases with the option to opt-out every December. Despite this, Ontario’s new standard lease form 2229E states tenants should have the option to end the lease within 60 days, in accordance with Appendix Section D. (Note, this only applies to leases entered after April 2018(6). However, most students choose to simply retain their leases for the duration of their school career, even if they are not in Waterloo for the entire time. Furthermore, four-year leases provide a defense against rising lease rates by maintaining rent at the price stated in the lease to avoid the average 5% yearly rent increase that is present in the KW area.

From these long-term leases and a massive coop population that moves in and out of Waterloo every four months, a strong secondary market of subletting has ensued. With around 49,500 members of the Student Housing Facebook group(7), where tenants try to find other students to sublet their room, the secondary market encompasses a large group of the student population. On this page, sublets fluctuate in price and availability depending on the season. This is a free market at its finest. From May to August, more people are looking for sublets than subletting so prices decrease. The average price of a spring term sublet from a random sample of 30 sublets on the Student Housing Facebook page was $389. Contrasted with the average rent price of $60(1), rooms are being subletted for $200 less than the average rent. This discrepancy in the secondary market seems to shift the burden on the tenants. Those who do not want to live in Waterloo are forced to pay rent for empty rooms or sublet to people paying two thirds of the value of the room. The landlords end up receiving the same rent. The loss is covered by the student tenants (or their parents).

To conclude, the student rental market in Waterloo is the largest in Canada; yet, multiple factors contribute to affordability problems. The combination of the increasing young professional population who are raising demand in the University area and the lack of demand in the spring semester means student tenants are paying higher prices during school and taking greater losses while subletting when they are absent from their rooms. The solution to this problem is not obvious. Will continued increases in supply of student housing continue to be matched with demand from alumni and young professionals moving into the area? Will government constraints on student housing prices be tolerated by landlords in a market where the tenants are absorbing loss? More study and basic trial and error of these methods is required to answer these questions fully. For now, student tenants are forced to accept this housing market reality in order to attend UW.


(1)Canada Mortgage and Housing Corporation. (2020). Rental Market Report Kitchener-Cambridge-Waterloo. Housing Market Information. Retrieved June 2020 from,http&sig=bFocHM6noLjK8rlhy11dy%2BkQJUBX%2BCDKzkjLHfhUIU0%3D


(2)University of Waterloo. (2019). Student Headcounts. Institutional Analysis and Planning. Retrieved June 2020 from


(3)Wilfred Laurier University. (2019). Student and Faculty Members. Laurier Fact Sheet. Retrieved June 2020 from


(4)University of Waterloo. (2019). Average earnings for Canadian work terms in 2019. Co-operative Education. Retrieved June 2020 from:


(5)University of Waterloo. (2019). Cost of Living. Off-Campus Housing. Retrieved June 2020 from*The%20average%20rental%20cost%20in,and%20condition%20of%20the%20property.


(6)Government of Ontario. (2018). Residential Tenancy Agreement (Standard Form of Lease). Central Forms Repository. Retrieved June 2020 from


(7)Student Housing in Waterloo. (n.d.) Home [Facebook page]. Facebook. Retrieved June 12, 2020 from


(Cover Image) Region of Waterloo. (n.d.). About Waterloo Region. [Image]. Retrieved June 2020 from

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