June 18, 2024

Canada becomes a nation of tenants

Canada becomes a nation of tenants

Economists at the Royal Bank of Canada claim that Canada has reached a record number of renters, as the number of people renting a home has increased 3 times compared to homeowners over the past decade.

The number of those who want to buy real estate is becoming less and less able to afford to buy it, masses of millennials are forced to rent housing in cities where they can build the career they dream of, and with increasing competition, prices are rising, which is what we see in the example of rental housing. market in Toronto and Vancouver.

This phenomenon, according to a new report by RBC Economics, is not limited to large urban centers – it is happening everywhere.

The main theses of the new report:

  • The ranks of Canadian tenants are growing rapidly. While two-thirds of Canadian households owned their home in 2021, the number of renters over the past decade has tripled compared to homeowners.
  • The transition to renting has spread widely across age groups and neighborhoods, although young Canadians and city dwellers still make up the largest group.
  • The largest growth in rental housing is among baby boomers and in smaller towns.
  • Pressures on housing affordability, demographics and behavioral preferences, which are currently driving these changes, will continue to fuel them in the coming years.

Bottom line: the rapid growth in the number of tenants is not going to slow down.

Canada becomes a nation of tenants

Growth in the number of tenants

Canada has never had so many tenants. Nearly 5 million households rented the housing they lived in last year, up from 4.1 million a decade earlier, according to the 2021 Census.

Rental housing increased by 876,000 households (or 22%) compared to an increase of 770,000 households (8%).

Millennials have been renting for longer than previous generations

Renting used to be a quick rite of passage to buying your first home. But there is plenty of evidence that younger generations of Canadians are not moving up the housing ladder as quickly (from rental housing to entry-level and larger). What’s more, evidence suggests that millennial home ownership rates lag behind those of previous generations at the same age. And millennials have been renting for three to five years longer than their Baby Boomer peers.

It doesn’t have to be spontaneous. Difficult housing affordability conditions are undoubtedly preventing millennials from climbing the housing ladder — and especially their entry into home ownership.

Rental housing is a popular phenomenon not only among the young population

Due to pressure on housing costs, renting has historically been more common among younger age groups and urban families.

However, recent census data points to a broader shift over the past decade. 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 renter group (+4%).

In addition, the proportion of families renting housing has increased in municipalities of all sizes. The increase in the number of tenants over the past ten years in small towns was 22%, and in large cities – 21%.

Demographic trends are also driving demand for rental housing

Growing immigration and an aging population are also supporting demand for rental housing. Given that most newcomers typically rent a home during their first five to 10 years of living in Canada, rapidly rising immigration targets (from 250,000 in 2011 to over 401,000 in 2021) have significantly increased the demand for rental housing.

Of the one million recent immigrants (immigrants who have lived in the country or permanently for five years or less) living in private homes, 56% (640,700) lived in rented housing in 2018. This is almost twice the national average, leaving immigrants a disproportionately high proportion of rental households in Canada.

Canada’s aging population has also contributed to demand growth. Of the 5 million residential units occupied by tenants in 2021, almost a quarter (22%) were occupied by seniors aged 65 and over. This is 3 percentage points up from 19% in 2011.

More and more Canadians are choosing to live alone

Since it is often necessary to have two incomes to cover the high cost of owning a home, many of these people end up renting. As of 2016, single people have overtaken married couples as the most common type of household and will make up almost 30% of all households in 2021.

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