If you’ve been paying attention to the news, or maybe talking to friends and family about their living arrangements, it should come as no surprise that the wealth gap between homeowners and renters is widening.
It’s a much-discussed issue, as the surge in Canadian housing prices during the pandemic left many people with home ownership aspirations feeling frustrated with the real estate market—and though home prices have come down as of late, higher interest rates mean owning a home now isn’t getting much easier. If you’re in the position of deciding whether to buy or rent, here’s what you should know.
Is the homeownership rate actually declining?
According to Statistics Canada, the homeownership rate—meaning the percentage of Canadians who own their home—has in fact declined from 69% in 2011 to 66.5% in 2021. Meanwhile, rental growth is up more than 20% and is more than double the growth of homeowners.
What’s happening with the rental market?
Unfortunately, as more people turn to rent while they wait out the uncertain home-buying market, rental prices in many major cities across Canada are increasing. In August, average rent prices in Toronto jumped 24%—however, consider that some of this might be attributed to post-pandemic growth, as demand soared when people returned to the city for work or school.
What’s the government doing?
The federal government of Canada has recognized the need for more housing, and specifically, more affordable housing, across the country. The 2022 Canadian Budget outlined proposals which included incentives for homeowners, such as the Tax-Free Home Savings Account, support for rent-to-own projects, and a new housing accelerator fund. While these initiatives may hopefully alleviate some concerns down the road, immediate impacts remain to be seen.
So, is it better to rent right now?
While rising rent prices are a deterrent, they could fluctuate. Newer builds and condos are likely to be rentals—according to Statistics Canada, 40% of the housing built in the five years ending in 2021 was tenant-occupied. And as more condos continue to be built, it’s likely that even more rental properties will end up on the market. Also, when the market isn’t on the side of sellers, many owners might choose to rent their property instead of putting it up for sale.
With the rental market growing amidst an uncertain home-buying market, your best bet is trusted guidance and local experience from a real estate agent.
Contact us today if you’re interested in renting in Toronto.
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