The high cost of homeownership and aging demographics drive a rise in renters across Canadian cities
Renters now make up 33 percent of Canadian households, the highest percentage ever, driven by the high cost of homeownership and aging demographics, as reported by The Financial Post.
In some cities, this percentage is even higher.
A study by real estate site Point2, based on the latest census data, shows that 28 of Canada’s 50 major cities have a higher share of renters than the national average. Montreal leads with 63 percent of households renting.
Over the past decade, the share of renters has grown steadily, increasing at twice the pace of homeowners between 2016 and 2021. More than 40 percent of homes built during that time are rented out, marking the highest tenant rate in decades.
While young people are still mostly renters, baby boomers, the largest demographic group up to 2023, are not far behind. “Renting has become widespread across all age brackets,” said Alexander Ciunti, the author of the Point2 study.
“With renters increasing at twice the rate of homeowners during this five-year period, it begs the question: Is renting becoming the go-to housing option for Canadians?”
Several factors contribute to this trend. Canada’s aging population has led more baby boomers to sell family homes and move into rental properties. At the same time, the housing affordability crisis has prevented many millennials and Gen Z individuals from buying homes.
“In a country where 18 out of 50 major cities have benchmark home prices above $1m, a boost in rentership is bound to happen,” Ciunti said.
Affording a home in Canada has become tougher as higher mortgage rates outpace the decline in home prices.
According to the latest Royal Bank of Canada housing affordability report, a household at the end of 2023 needed to spend 63.5 percent of the median income to cover homeownership costs, up from 61.8 percent in the third quarter, as noted by RBC’s assistant chief economist, Robert Hogue.
The high number of new immigrants, who tend to rent initially, also fuels the increase in renters. This has put pressure on the housing market, causing rent prices to soar in recent years.
The average asking rent for a home in Canada hit a record $2,202 in May, up almost 10 percent from a year ago, according to Urbanation and Rentals.ca.
All provinces reported year-over-year increases for purpose-built apartments and condominium rentals, with the prairie provinces experiencing the highest rent inflation. Rents rose 21 percent in Saskatchewan and 17.5 percent in Alberta.
While you might expect Vancouver or Toronto to have the highest share of renters, Montreal holds that distinction. This Quebec city also has some of the lowest average rent prices among major cities, with city centre rents around $3,000, significantly lower than in downtown Toronto or Vancouver.
More than half of the households in Sherbrooke, Que., rent, likely for the same reason. Along with Trois-Rivières and Saguenay, Sherbrooke has rents below $1,500, even in the city centre.
In Vancouver, where the composite benchmark home price in May was $1,212,000, 54 percent of households rent. Toronto, with a benchmark price of $1,117,400, has the largest number of renting households due to its larger population, but its 48 percent share ranks only fifth in Canada.
Only Richmond Hill, north of Toronto, saw a decline in renters, dropping from almost 26 percent to about 22 percent, despite homes there going for $1.5m.
