There's an old rental building on Main Street that is undergoing a major renovation to all its apartments. Once finished, the rent for a small two-bedroom that is probably 700 square feet will go from $850 to $2,500.

The residents, most of them younger renters, have relocated.

Half of Vancouver's population rents, and a lot of those renters live in old apartment buildings along arterial roads such as Main Street, or big old houses, carved up into suites. Prior to Vancouver's real estate mega-boom, a lot of those rental buildings were undesirable to investors. Now, investors are scooping them up either to tear them down and build anew, or renovate them so they're almost new. And once they are re-built, those rental apartments at least double in price compared with what existed before at the same location. And yet, as house prices increase, residents are increasingly turning to rentals. If the rentals are going up in price as well, who will be able to afford to live here?

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We're seeing this out-with-the-old, in-with-the-new happening at Marine Gardens on SW Marine Drive, near Cambie, where the 70-unit townhouse village is going to be traded for condo towers that will include 70 units of market-rate rental. The rents in the new building will double. Of course, most people living at Marine Gardens can't afford a rent hike. They were living at Marine Gardens, which is rundown, because the low rent fell well within their means.

"One of the mantras I've heard almost accusingly from city officials is that we have had 'artificially' low rents," says one of the few remaining tenants at the Gardens, Jillian Skeet. "But if you take the median household income for Marpole from the city's own Marpole Plan, it's $48,000. And our rents meet the affordability definition that is one-third of income for rent."

Ms. Skeet has a point. The replacement rentals are beyond the reach of most renters, which is just another facet of Vancouver's affordability issue. The city may be pushing developers to build more rentals, but what they're building is of little use to low- to mid-income residents.

"When you have an affordability crisis like we have in Vancouver, the first thing you do is protect your existing stock," says Ms. Skeet. "It's not rocket science."

Protection of existing rental buildings wasn't among Mayor Gregor Robertson's recent suggestions. In his publicly released letter to Premier Christy Clark, he calls for a higher property transfer tax on luxury housing and tracking of property ownership. Initially, we'd only heard him suggest a tax on property flipping, which seemed to many like too little, too late. The new suggestions are more confidence-inspiring, although much depends on how the premier's office responds. At this point, it could be little more than a rattling of the cage, to appease the growing body of angry residents who are feeling the squeeze.

Whatever the direction taken, most would agree that government needs to stop dithering. Vancouver's vacancy rate is around zero, the worst in Canada. We already know the unaffordable state of home ownership. The cost of owning a detached bungalow (mortgage payment, utilities, property tax) now requires 82.4 per cent of a typical household's monthly pretax income, according to the RBC Affordability Report. As Ms. Skeet touched on, it's a long-held rule that housing becomes unaffordable when it requires more than one-third of household income.

"Our data shows things are going to get worse," says Tony Roy, executive director of the BC Non-Profit Housing Association.

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He gives credit to the city for significantly increasing the supply of rental. But the provincial and federal governments have to get back into the housing business, considering that half the renters in Vancouver earn less than $41,000 a year.

"I would say for 50 per cent of renters there's nobody building for that market right now."

The only way this scenario can play out is that those who are getting squeezed will move on, and that won't be good for the city, says Avi Friedman, the McGill School of Architecture professor who spoke this week at the Social Purpose Real Estate conference. Dr. Friedman, co-founder of the Affordable Homes Program at McGill, is passionate in his belief that government needs to intervene.

"There is something fundamentally, economically wrong in making sure that young people will not live in the place where they grew up," says Dr. Friedman.

He does not buy into the notion that Vancouver's housing market is at the whim of the free market, and government can only watch from the sidelines.

"The free market, builders, developers, are motivated by one thing: profit. They will not do something from the goodness of their heart. In this regard, you cannot continue to dance with the devil, and the government here continues to dance with the devil. You need to take sides, and in my opinion, taking sides means you start to introduce all kinds of measures, strategies and regulations to make sure that affordable housing will still remain affordable and available. I don't see this happening on a large scale.

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"If we say, 'you are on your own buddy, go fight for yourself,' it means that we are creating a different society. Years later we will pay dearly for this type of attitude, when we say we don't care about the homeless, we don't care about seniors, or others on that unfortunate list. If something in Canada is worth fighting for, it's to create a balanced society where everybody has a chance. Where nobody is thrown under the bus."

There are people who argue that the younger generation will have to forego the dream of owning a home in the city where they grew up. They'll have to pay high rents instead. Or, they'll have to go to a new community and commute, even if they're relatively well off. The rationale is, the city has become the domain of the super wealthy, or the lucky generation that bought in early enough.

Saeid Fard is the co-owner of a tech start-up that employs a dozen people in Vancouver. He moved away from Vancouver to start his career, working as a management consultant for McKinsey & Co. and as an investment banker with Goldman Sachs, before returning home to be with family. He is educated and ambitious, and outspoken about Vancouver's stagnant job market and over-priced housing. Mr. Fard rose to local fame when he wrote a blog post earlier this year titled The Decline of Vancouver, which went viral.

He is rankled by the suggestion that young people who expect to own a home where they grew up are "entitled," and they should give up the dream of home ownership and prepare to rent for life.

"I'm hearing this 'entitlement' word," says Mr. Fard, a 28-year-old renter who's currently looking to buy a condo. "But when I hear homeowners saying, 'no way should I lose money on my home,' to me, that is the definition of entitled.

"We've mortgaged the future of the younger generation so that older property owners can get rich. People don't seem to find that there's something pernicious about a city where young people are fleeing and the future of the city is fleeing. It's hard to do anything about it when half the city is in denial and benefiting from it."

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Mr. Fard, who spoke at the affordable housing rally two weeks ago, says the gap between local economy and house prices makes it nearly impossible to settle in Vancouver. His company is the sort of growing young business that Vancouver desperately needs. However, he also says it's likely that one day he'll return to the U.S., where there are more options. Mr. Fard lived in Seattle when he worked for Expedia, and was struck by the vast difference between the cities.

"The difference in culture is staggering," he says. "Seattle has as many if not more immigrants than Vancouver. But they are all there to work and contribute to the economy and to invest in it. They're getting really smart engineers and MBAs from places like India and China who work at Microsoft or Amazon or Expedia. And they build wealth not just for themselves but for the city as well. When a city grows because of business, everyone wins. They were able to increase their minimum wage to $15 an hour because of the growth. They are still seeing a price boom in housing, but because it's driven by local economics, they aren't having an affordability crisis.

"It's not like people are coming into Vancouver and investing in the city and wanting to see the local economy thrive. They're not investing in the economy. They're investing in real estate."

He also defends the right to own a home because "property ownership is the No. 1 source of wealth generation. "While I think there needs to be an affordable stock of rental, I would never as a policy maker discourage ownership.

"To create a policy that encourages renting and discourages ownership to me only exacerbates the inequality problem in this city."