A two-bedroom home could cost $4,325 per month in 2032 in Montreal. This is the forecast made by a researcher at Concordia University, based in particular on artificial intelligence and the prices of housing available for rental.
To conduct his study, Erkan Yönder, associate professor of finance and real estate at the John Molson School of Management, relied on several data, namely those from the Canadian Mortgage and Housing Corporation and those from Statistics Canada, as well as demographic and immigration projections established by the Government of Canada. The researcher then used an artificial intelligence neural network to make predictions about future housing prices.
To determine the current amount of rents, Mr. Yönder, however, relied on data from the Rental.ca platform, which lists housing for rent, and not on that of the CMHC, which includes all housing, including those which have not changed occupant and whose price is generally lower.
Thus, in March 2023, the average price of a two-bedroom home in Montreal was $2,100 per month, he indicates. According to his predictions, the price of this same housing could reach $3,325 in 2027 and $4,325 in 2032.
The researcher also examined other regions in Canada. In Toronto, the monthly rent for two-bedroom apartments will rise to $5,600 per month in 2032, according to his forecasts. In Vancouver, a unit of this size will cost $7,750 in six years.
Immigration policies create significant pressure on the rental market, underlines Erkan Yönder. According to Statistics Canada, in 2023, the Canadian population increased by 1.2 million inhabitants, 97.6% of which comes from international immigration. It is therefore an element which, added to others, such as the state of the real estate market, the pace of new construction, income in the different sectors and the vacancy rate, makes it possible to establish an analysis model. According to the researcher, the use of artificial intelligence makes it possible to increase the precision of predictions.
Mr. Yönder concludes that an approach is needed that takes local issues into account to remedy the problem of imbalance between supply and demand. We also need to reduce regulatory barriers and speed up housing construction.
Gray areas
The study contains some gray areas, believes Adam Mongrain, housing director at Vivre en ville. Although he finds the correlation established between socio-demographic factors and rent increases interesting, he questions the model used with artificial intelligence. “We know that applications like ChatGPT can hallucinate – the technical term for “inventing things,” he explains. I have reservations about the methodology and the certainty with which we put forward the figures, but, at the same time, it is a plausible proposition of the current trajectories. »
It is true that the imbalance between supply and demand creates pressure on rents, and in Montreal, it is not uncommon to see housing for rent for $2,600-2,700, he emphasizes. “We are already well on our way. » On the other hand, predictions can be risky, because there can be a large difference between the average price of housing and that paid by individual tenants. “And it takes someone who is willing to pay these high prices. »
Spokesperson for the Popular Action Front in Urban Redevelopment (FRAPRU), Véronique Laflamme also expresses certain reservations concerning the methodology and the “supposed neutrality” of artificial intelligence. “Still, we can already see that a lot of housing is overpriced today,” she says, noting that she recently saw a 4 and a half for rent for $2,200 in Saguenay.
According to her, the issue remains the need for governments to invest in the construction of social housing and truly affordable housing. “If we do not act with strong structuring measures, housing prices will continue to explode. »
