Canadian Renters Are Twice as Likely Than Owners to Live in Unaffordable Housing

Nearly one-third of Canada’s tenants are stuck paying an unaffordable amount on shelter, compared to about 16% of owners, according to new research.

By Josh Sherman | 3 minute read

Although some homebuyers are struggling with higher interest rates, owning a home is generally more affordable than renting in Canada, a new survey suggests.

There are many perks to owning a home in Canada. Most Canadians still see it as a worthwhile investment. You don’t have to worry about the threat of eviction (or reno-viction). And you’ve got the right to alter your property as you see fit (condo-board rules notwithstanding), to name just a few.

The results of a new survey from Statistics Canada and the Canada Mortgage and Housing Corporation now add another perk to the list: it’s far less common for homeowners to be saddled with unaffordable housing costs than renters.

In fact, according to the latest installment Canadian Housing Survey, 16.1% of owners dedicated upwards of 30% of what they earn towards shelter costs in 2022, compared to a third of renters. In other words, renters were twice as likely to find themselves paying what StatCan and CMHC agree crosses the threshold into unaffordability.

It’s no surprise, then, that despite higher interest rates and the high cost of housing in the country’s urban centres, one in five Canadians expressed homebuying intentions this year, according to a separate poll from Wahi.

There are certainly cultural factors at play. Canada’s ownership rate has been hovering in the mid-to-high 60% range — even in recent years — making it the established norm. However, a 2021 Royal LePage study also found that owning makes the most financial sense more than 90% of the time.

Recent Buyers Especially Worried About Canadian Housing Affordability

While the latest StatCan and CMHC survey appears to support the notion of homebuying over renting, it’s worth noting that the survey suggests both tenants and owners alike have growing concerns about affordability.

Although a larger share of renters (20.8%) than owners (11.2%) were dissatisfied with affordability in 2022, each group represents an increase north of three percentage points from what was observed in 2018. 

Across the board, 14.5% of households surveyed indicated that they were dissatisfied with how much they spend on shelter relative to earnings, up from 11.1% four years prior. 

StatCan notes that since it began the survey in 2018, first-time homebuyers have become more likely to express dissatisfaction with housing costs. In 2022, 21.3% of first-time buyers weren’t happy about affordability, versus 13.4% before the pandemic.

Over this period, the survey suggests the median income of a first-time homebuying household failed to keep pace with home prices. Over the four-year period, the median household income for first-time buyers increased 5.1% to $114,950, while outstanding mortgage amounts surged 12.3% to a median of $280,000.

Housing Is Part of a Broader Cost-of-Living Issue 

Of course, housing expenses aren’t the only hurdle facing Canadian households: “Households felt the pressure on their overall household budget in 2022, because of an overall rise in shelter costs, as well as price increases for other items,” notes StatCan in the release.

In addition to shelter costs, which soared 20.6% from 2018 to 2022, the national statistical agency cited gas and food, which skyrocketed 34% and 22.7%, respectively, over the same period, according to StatCan’s Consumer Price Index, which measures inflation.

As a result, there was a sharp increase in households who say it’s hard to make ends meet (30.9%) over 2018 (21.9%).

StatCan suggests the situation may worsen in the coming years.

About 2.2 million households — accounting for nearly half of all outstanding mortgages — are set to renew their mortgages this year and next. Many are set to face much higher mortgage payments when they do so, since a large bulk of these loans were previously originated or renewed during periods of rock bottom rates. 

“This increase in mortgage costs will squeeze households’ budgets and savings further, particularly for those that took on large amounts of mortgage debt when the cost of borrowing was low,” StatCan warns.