Soaring rents may drive homeownership

October 18, 2022




Soaring rents in Canada, which reached an average of over $2,000 per month in September 2022, may reverse a decline in home ownership rates from the past few years, data suggest.
According to Statistics Canada, 10 million households in Canada owned their home—more than at any point in the country's history. However, while the number continues to grow, Canadians overall were less likely to own their home in 2021 (66.5 per cent) than they were a decade earlier, when a record high (69 per cent) were homeowners.
Studies also show that, of those living in a new home built after 2016, 40.4 per cent are renters.
Canada Mortgage and Housing Corporation notes that while condos make up 39 per cent of the housing stock in the core of Canada’s cities, half of these downtown condos are being rented out by their owners.
It would appear that Canada is becoming a country of renters, but the high costs and zero equity that rentals now represent may change the narrative. The average rent in Canada hit an all-time high of $2,043 per month in September, according to the latest National Rent Report from Rentals.ca and Bullpen Research & Consulting.
This is up 21.9 per cent from April 2021, and rose from $2,000 in August 2022.
“The completion of a number of new purpose-built rental apartments with higher rents, contributed to the significant annual rent increase,” the report noted.
In Toronto, average apartment rents are up 31.2 per cent, year-over-year to $2,855. In Vancouver this average rose nearly 30 per cent to $3,222.
Smaller centres weren’t spared: London rents rose 33.1 per cent to $2,020; Calgary rents 24.1 per cent to $1,770; North York rents 22.4 per cent to $2,381; and, Kitchener rents 21.3 per cent to $2,100. 
Nationally, the average rent for condo apartments was 7.7 per cent higher in September 2022, at $2,382, than last September.
Yet real estate agents note, rental payments of $2,100 per month could cover the cost of a $300,000 to $350,000 condominium in many Canadian cities—assuming a 5 per cent downpayment and current five-year variable rate of 4.5 per cent with a 25-year amortization.
Examples include Calgary, where Realtor.ca lists many condo apartments under $200,000; Home BUILDER found three dozen condos in North York under $300,000.
In the past five years, the average home price in Canada has increased about 40 per cent—an equity gain not realized by renters. This, combined with rising rents and recently lower home prices, may persuade many tenants to make the move into home buying.