January 5, 2023
Canada is Moving Towards a Rentership Nation
Is Canada becoming a nation of renters?
That’s the interesting question posed recently by RBC Economics as it looked at the growing trend in the country for more people renting a home today and fewer considering home ownership.
The numbers tell the tale of an evolving housing market in Canada. According to the 2021 Census, almost five million households rented the home they lived in last year—up from 4.1 million a decade earlier, according to the RBC report.
“And while owner households still dominate the Canadian landscape by a ratio of two-to-one, renters accounted for most of the growth over the past 10 years. Rentership increased by 876,000 households (or 22 per cent) compared to a rise of 770,000 (eight per cent) in owner households,” it said.
Several factors have contributed and will continue to contribute to that upward trend.
The first is the Millennial segment of the population. They are less likely than their parents to own a home and they are renting their homes for a longer time than previous generations. Some of this is lifestyle choice but it’s also about affordability. Quite simply, for some people, home ownership is no longer attainable as prices, particularly in large city centres like Toronto and Vancouver, have become exorbitant.
The RBC report said Millennials are lingering in rentership three to five years longer than their baby boomer counterparts.
But surprisingly the report points to a broader shift of the population becoming renters in Canada. It’s not just young people anymore.
“Between 2011 and 2021, baby boomers (born 1946 to 1964, and the largest generation of Canadians) surpassed millennials (born 1981 to 1996) as the fastest growing group of renters (+four per cent). Additionally, the share of renter households has increased across municipalities of all sizes. At 22 per cent, renter growth over the last 10 years was slightly stronger in smaller cities (census agglomeration areas) than in larger cities (census metropolitan areas) at 21 per cent. The widespread shift toward renting suggests affordability issues in large urban areas may not be the only driving force,” said RBC.
Another factor driving the rental demand today and into the future is rising immigration levels. Most newcomers to the country tend to flock to rental housing initially and live there for a few years. RBC said immigration rising from 250,000 in 2011 to more than 401,000 in 2021 has significantly boosted demand for rental housing.
“Of the one million recent immigrants (a landed immigrant or permanent resident for five years or less) living in private dwellings, 56 per cent (640,700) were living in rented accommodation in 2018. That’s nearly two-times the national average, leaving immigrants to represent a disproportionately high share of rental households in Canada,” it said.
One other factor fueling the rental demand is Canada’s aging population. Of the five million tenant-occupied dwellings recorded in 2021, nearly a quarter (22 per cent) were occupied by seniors aged 65+. That’s a three percentage-point increase from the 19 per cent share reported in 2011, added the report.
Another factor in boosting rental demand is more Canadians are living alone these days. As of 2016, persons living alone overtook married couples as the most prominent household type, representing nearly 30 per cent of all households in 2021.
What does this all mean for the rental market in the years to come?
There is a critical housing shortage in the country right now. Many more homes need to be built to keep up with the soaring demand.
More rental units will be required in various categories from places that can accommodate families, multi generation families, seniors to the person living alone.
Chris Chornohos has a passion for real estate and helping his clients reach their business goals by providing Real Estate Investors and Owners with the first class valuation and advisory services to close more deals. Chris is also an investor, builder and developer. Reach out to Chris today to help with your Real Estate needs.
E: Chris.Chornohos@nmrk.com W: www.chrischornohos.com
Image Source: https://www.dallasnews.com/opinion/editorials/2020/04/15/dallas-needs-to-help-renters-and-protect-landlord-rights-heres-the-way-to-do-that/
