A recently released RE/MAX Canada report confirms that renting is on the rise. While some people rent because it offers greater flexibility or suits their lifestyle, the report discusses the economic and regulatory barriers that are making it harder for would-be buyers to enter the housing market. These factors are pushing more Canadians toward long-term renting instead of homeownership.
Source: Stats Canada
According to the report, affordability remains the primary hurdle. Escalating home prices, which are more than doubling in many markets from 2006 to 2021, have made it increasingly difficult for aspiring homeowners to accumulate the necessary downpayment. Even with a steady income, many potential buyers find themselves squeezed by not only the high listing prices but also the added costs imposed by downpayment requirements, municipal taxes, closing fees, and the OSFI stress test.
The persistent shortage of affordable housing supply is another factor. Despite an eagerness among builders and developers to initiate new projects, financial and regulatory constraints have significantly slowed progress. High land costs, steep development fees, zoning restrictions, and lengthy approval processes have all contributed to the shortfall in new construction. This lack of supply is compounded by a market preference for smaller housing units, while the demand for “missing middle” properties – housing options that cater to urban family living – continues to grow.
Furthermore, population growth has put stress on the housing market. Canadian cities have experienced remarkable growth between 2006 and 2021, with increases ranging from a modest 13.6% in Hamilton to an impressive 36% in Calgary. With projections indicating that the national population could approach 52.5 million by 2050, the imbalance between supply and demand is likely to intensify. The population surge has not only amplified pressure on housing stocks but has also fueled competition in rental markets, pushing up rental rates even as affordability issues persist in the purchase market.
The financial landscape is further complicated by rising development charges. In major urban centres such as Toronto, Hamilton, and Vancouver, municipal fees have reached record highs, further inflating overall housing costs. Data from 2022 shows development charges per low-rise unit in Toronto at nearly $190,000, with significant increases recorded in other cities as well. These heightened costs are contributing to a slowdown in housing starts, as evidenced by the drop in construction activity observed in Ontario from 2023 to 2024.
