Homeownership Rate in the Canadian Real Estate Market

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If you’re looking to buy residential property in 2021, expect the Canadian dream to be a little more difficult. The housing supply continues to tighten in the face of strong demand. With low interest rates, changing consumer trends, normalization of immigration and the recovery of the Canadian economy, many expect home prices to continue to rise in the real estate market. Canadian, whether in major urban centers or the rural communities that dot the country. Conditions are easing and stabilizing, but the post-COVID housing market undoubtedly looks very different.

During the last federal election campaign, major political parties laid out their plans to alleviate the housing affordability crisis and ensure that Canadians who want to buy a home can do so. But will this be enough to increase housing opportunities and homeownership rates? Many industry observers argue that their policy proposals, such as home renovation CMHC-guaranteed tax credits and cohabitation mortgages may not be enough to curb sky-high prices. Instead, policymakers need to approve more procurement initiatives, such as streamlining new developments and speeding up the application process.

Until housing supply increases, challenges could persist for many, including newcomers trying to buy in the Canadian real estate market, whether it is a single-family home in Atlantic Canada. or a condominium in Vancouver. In the meantime, many Canadians have remained on the fringes of the housing market, renting until affordability returns to the market. Homeownership rates have declined nationwide, according to a recent report.

Homeownership rates drop in the Canadian real estate market

Over the past 20 years, the homeownership rate in Canada has steadily increased, from 63.9% in early 2000 to 68.55% before the coronavirus pandemic. But while the majority of Canadians own their homes, about a third of the population are renters. Most tenants are concentrated in two provinces: Ontario and British Columbia.

With criticism that all party leaders have focused their policy proposals on homeownership rather than tenants, this could cause problems in the two most populous provinces. In fact, most eligible voters in Ontario are not even homeowners, especially among millennials.

Here is a breakdown of owners and non-owners in these locations, based on Statistics Canada figures:

Ontario

18 to 34 years old

  • Owners: 319,295
  • Non-owners: 2,481,539

35 to 54 years old

  • Owners: 1,380,254
  • Non-owners: 2 002 721

55+

  • Owners: 2,053,363
  • Non-owners: 2,233,408

British Columbia

18 to 34 years old

  • Owners: 96,723
  • Non-owners: 833 303

35 to 54 years old

  • Owners: 433,804
  • Non-owners: 723,006

55+

  • Owners: 826,399
  • Non-owners: 756,740

Simply put, the rate of home ownership is high nationally. However, when you dive deeper into the provincial numbers, especially in two of the country’s more expensive provinces, the numbers change. Renting in municipalities like Toronto and Vancouver is expensive, forcing young people to spend more years saving and paying skyrocketing rents.

Better Dwelling also made this important point: “It’s not a new problem either, it was there in the last election, people just didn’t know it.

Another striking revelation: the decline in housing investment

A different trend is slowly emerging in the Canadian real estate market and in the national economy in general: sliding housing investment.

According to the Bank of Montreal (BMO), investment in the residential construction sector in Canada fell at an annualized rate of 12.4% in the second quarter of 2021, contributing to gross domestic product (GDP) of 1.1% From one year to another. ) contraction. This is crucial because this segment of the market represents over 10 percent of the Canadian economy.

“Despite the increase in spending on home construction and renovation, the segment fell due to lower costs to transfer ownership, as sales fell from record highs,” the economist wrote. BMO principal, Sal Guatieri, in a research note. “The report is a timely reminder that the housing sector now represents such a large share of GDP that it is likely to act as a drag for some time.

Meanwhile, this could lead to a worrying trend in the housing industry, as a decrease in residential investment could translate into a decrease in supply.

On the way to 2022 – and beyond!

The Canadian real estate market has many scenarios to follow, from low borrowing costs to tight inventory. The coming year is set to be an exciting time in Canada, with many elements weighing on the direction of overall housing activity, such as interest rates, the materialization of federal electoral policies, the transition of professionals to work, and much more.

Sources:

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