RBC says Canada may be a renters’ country soon

The latest report by RBC says rentership is growing much faster than homeownership in Canada: the number of renters has been rising at three times the pace of homeowners during the previous 10 years.

While homeowner households still dominate the real estate market by a two-to-one ratio, renters account for the main share of the recent growth. According to the report, over the past decade, rentership went up by 22% or 876,000 households. At the same time, homeownership rose by 8% or 770,000 households.

Canada has never seen so many renters. During the previous year only, almost 5 million households rented the property to live in, which is up from 4.1 million reported 10 years earlier. Besides, this change is seen not only among young urban citizens, it’s widespread across all age groups and regions.

Baby boomers (those who were born between 1946 to 1964) outpaced millennials (born between 1981 to 1996) as the fastest-growing category of renters during the period from 2011 to 2021, the report says.

In addition to it, more households in both large and small cities choose to rent, which points to strong affordability issues. It also means that urban areas may not be the only demand driver. According to the report, renter growth during the previous 10 years was higher in smaller cities (22%) than in larger ones (21%).

So what is driving the rental demand? The report names Canada’s demographic trends as the reason, including growing immigration and an aging population.

Immigrants account for a disproportionately high share of rental households and Canada’s sharply rising immigration targets (from 250,000 in 2011 to more than 401,000 last year) have drastically increased the demand for rental properties. RBC’s report said 56% or 640,700 of the one million recent immigrants who live in private dwellings rented them in 2018.

The aging population is another demand driver, as 22% of the five million tenant-occupied dwellings reported in 2021 were occupied by seniors (65+), compared to 19% recorded in 2011.

In addition to it, more Canadians prefer to live alone. They represented about 30% of all households last year. Single people outpaced married couples in 2016 as the most prominent household category. Many of them are forced to rent because of the high cost of homeownership which often requires two incomes.

Affordability issues are also influencing younger generations trying to enter the homeownership category. Right now, millennials have to rent for 3-5 years longer than their baby boomer counterparts did.

Various programs developed for helping first-time homebuyers don’t seem to do a lot, as the homeownership rate keeps going down (66% last year).

These tendencies are not expected to change in the nearest future.

“In our opinion, these demographic and behavioural tendencies will keep pushing the demand for rental housing up in the coming years,” – the report’s authors, Robert Hogue and Rachel Battaglia, noted. “More rental units are necessary. A lot more.”