Rentership is growing at a much faster pace than homeownership in Canada, with renters increasing at three times the rate of homeowners in the past decade, according to a new Royal Bank of Canada report.
Although homeowner households still dominate the housing market by a two-to-one ratio, renters account for most of the recent growth, the report said. In the past 10 years, rentership increased by 22 per cent or 876,000 households, while homeownership increased eight per cent or 770,000 households.
Indeed, Canada has never had so many renters. In the past year alone, nearly five million households rented the home they lived in, up from 4.1 million a decade earlier. And the shift is not just a young, urban phenomenon, but a widespread change across age groups and areas.
Baby boomers (born between 1946 to 1964) surpassed millennials (born between 1981 to 1996) as the fastest-growing group of renters between 2011 and 2021, according to the report.
Similarly, more households in both big and small cities are renting, suggesting affordability issues in large, and that urban areas may not be the only driving force. The report found that renter growth over the past decade was stronger in smaller cities at 22 per cent, than in larger cities (21 per cent).
What’s fuelling the rental demand? The report points to the country’s demographic trends, which include rising immigration and an aging population.
Immigrants represent a disproportionately high share of rental households and Canada’s rapidly growing immigration targets, rising to more than 401,000 in 2021 from 250,000 in 2011, have significantly boosted the demand for rental housing. The report said 56 per cent, or 640,700 of the one million recent immigrants living in private dwellings, were in rental housing in 2018.
The aging population has also boosted demand, with 22 per cent of the five million tenant-occupied dwellings recorded in 2021 occupied by seniors (aged 65 and up), compared to 19 per cent in 2011.
Another factor is that more Canadians are choosing to live alone and represented almost 30 per cent of all households last year. Single people overtook married couples in 2016 as the most prominent household type. Many of these individuals end up renting because the high cost of homeownership often requires two incomes.
Affordability challenges are also affecting younger generations trying to climb the housing ladder. Millennials are lingering in rentership three to five years longer than their baby boomer counterparts before entering homeownership, the report said.
The many programs designed to help first-time homebuyers do not seem to be doing much either, as the rate of homeownership — 66 per cent in 2021 — is trending lower.
These trends are not expected to disappear anytime soon.
“We expect these demographic and behavioural trends to continue fuelling demand for rental housing in the years ahead,” the report’s authors, Robert Hogue and Rachel Battaglia, said. “We’ll need to build more rental units. A lot more.”