Nojoud Al Mallees, The Canadian Press
Posted on Wednesday, September 21, 2022 at 13:32 EDT
Canada’s homeownership rate is declining, with young adults in particular less likely to own a home in 2021 than they were a decade ago, Statistics Canada says.
According to the latest census release, 66.5% of Canadians owned a home in 2021, down from a high of 69% in 2011.
House prices have risen considerably in recent years compared to the income of Canadians. Statistics Canada says that while the median household income grew 18 per cent between 2016 and 2021, the median value of an owner-occupied home increased 39.6 per cent.
“When the price of buying a home grows faster than household income, it becomes more difficult for people to buy a home,” the report said.
The decline in homeownership rates between 2011 and 2021 was the largest for the youngest Canadians, with a drop from 44.1 to 36.5 for those between 25 and 29 years old.
Canadians between the ages of 30 and 34 saw a similar but slightly smaller decline in home ownership, falling to 52.3 per cent from 59.2 per cent.
Mike Moffatt, an assistant professor at Western University’s Ivey School of Business, said the data on these age groups illustrates why the overall homeownership rate isn’t as helpful in understanding recent trends.
“As people get older, they are more likely to own a home,” he said. “That’s why I think it will be important to break down the data by age group.”
Meanwhile, more Canadian households are renting. Statistics Canada says that the number of renter households grew at more than double the rate of owner households between 2011 and 2021.
Brittany MacKenzie, a real estate agent in Fredericton, NB, said she has noticed a change in attitudes among young people hoping to become homebuyers as prices rise.
“I found that a lot of our younger buyers have been hesitant now and have gone out and decided to rent for a while,” he said.
The federal agency says newly built homes are increasingly likely to be occupied by renters, with 40.4 percent of new homes built between 2016 and 2021 now rented.
Statistics Canada also compared the monthly housing costs of renters and homeowners and found that those costs increased faster for renters than for homeowners in the latest census period.
The median monthly cost of housing for renters increased 17.6% between 2016 and 2021, outpacing inflation, as the consumer price index rose 9.5% during that same period. For homeowners, the median monthly cost of housing increased 9.7 percent.
Housing affordability actually improved in 2021, but one in five renters still spent more than 30 percent of their income on housing costs.
Statistics Canada says the improvement in affordability was the most pronounced for low-income renters and can be largely attributed to temporary income supports from COVID-19.
Moffatt said the data doesn’t provide an accurate picture of housing affordability due to these support measures.
“It’s going to be pretty misleading just because people were getting this kind of one-time increase in income,” Moffatt said.
Since the census data was collected, the housing market has changed. Home prices continued to rise before falling sharply in 2022 as interest rates rose.
According to the Canadian Real Estate Association, the national median price for a home sold in August was $637,673, down 22 percent from February.
Eric Olson, deputy director of Statistics Canada’s center for income and socioeconomic well-being statistics, acknowledged that these changes need to be taken into account when assessing the state of housing today.
“Obviously, interest rates are going to have a direct relationship to housing costs for anyone who is taking on a new mortgage or renewing a mortgage,” Olson said during a news conference on Wednesday.
Moffatt said that in addition to falling home prices, rental prices have risen sharply since the spring of 2021.
“That’s just because of the general housing shortage and the fact that those higher interest rates are expenses for homeowners, and they’re passing those expenses onto renters whenever they can,” Moffatt said.
According to the most recent Consumer Price Index report, rent increased 4.7 percent in August compared to a year earlier.
The census report released Wednesday also addresses the upward trend in condominium construction, especially in urban centers. Between 2016 and 2021, more than half of the houses built in Toronto, Vancouver and Montreal were condominiums.
Millennials made up the bulk of the estimated 4.3 million Canadians living in condominiums in 2021, with almost three in 10 condominium dwellers in that age cohort.
This report from The Canadian Press was first published on September 21, 2022.