Ryan Ing, a 32-year-old tech worker in Toronto, says renting gives him more flexibility during a period of potential changes, including new jobs, shifting salaries and new relationships.Cole Burston/The Globe and Mail
The average Canadian renter is not only leasing their home later into their lives, they’re also more squeamish about jumping into home ownership in today’s economic environment, according to two new studies.
Data from SingleKey, a renter services platform that screens tenants, found that the average age of renters is now 32 across Canada, and rising closer to 34 in bigger cities like Toronto. It’s the first time SingleKey has measured the average age of renters.
Meanwhile, a survey from Bank of Nova Scotia released Thursday found that 62 per cent of buyers who are hoping to enter the housing market said that economic uncertainty is negatively affecting their finances and causing them to delay their purchasing plans.
Royal Lepage sales representative Tom Storey said it’s not hard to understand why some people are willing to rent for longer into their lives, given that the downturn in housing prices in Canada has broken the perception that property values are bound to always go up.
“A lot of people that didn’t enter the market two, three or four years ago are actually ahead financially because of it, and that was not the case for the previous decade,” said Mr. Storey, who said the result is that buyers are now willing to rent for longer and take a wait-and-see approach.
“People are noticing that and are saying ‘Okay, not getting into the market worked out for us.’”
The two data points from SingleKey and Scotiabank highlight some of the reasons why major Canadian housing markets remain in a slump, even as prices have come down considerably from their pandemic peaks, and the Bank of Canada has signalled that it is at the end of its rate cutting cycle. At the same time, renting has become a better deal in cities like Toronto and Vancouver, where rents are dropping to their lowest points in four years.
SingleKey chief executive Viler Lika said interest rates are currently high, and that’s also making home ownership less of a deal compared to renting.
“Typically you’re paying 30 per cent less per month if you’re renting, and it was an even better deal when mortgage rates were higher,” he said.
Not all Canadians are renting by choice. The Scotiabank survey found that 53 per cent of respondents with plans to buy say that home ownership still feels out of reach.
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Meanwhile, the SingleKey data show that the average renter earns $67,537, but the average household income is $109,000. That gap implies that many renters have to cohabitate to make ends meet. In cities like Vancouver, renters are also spending more than 40 per cent of their income on housing.
However, Sam Lichtman, a financial planner with Millen Wealth Advisors in London, Ont., said he is noticing that people are changing how they make their home ownership decisions and are open to renting for longer.
Mr. Ing, on the balcony of his rented apartment in downtown Toronto, on Wednesday. He says he’s financially better off by investing the money he has saved as a renter.Cole Burston/The Globe and Mail
If people have the money to buy a home, they have started putting off the purchase until they have factors pushing them toward ownership, like starting a family, he said.
“In the past, we’ve seen real estate being so attractive that as soon as people had money to buy, they would buy, and that’s not the case anymore,” said Mr. Lichtman, who added that more people are now treating ownership as a personal decision instead.
“There’s maybe a little less shame about renting than there used to be.”
Ryan Ing, a 32-year-old tech worker in Toronto, said he chooses to rent because of the flexibility it offers him during a life period with lots of potential changes: new jobs, different salaries, new relationships and shifting desires to live either closer to downtown or further from it.
He said some of his friends purchased a one-bedroom apartment in their 20s but found themselves having to deal with an asset that didn’t fit into their lives a few years later.
“All of a sudden two years later, they have a partner, they work from home now, they used to have an office, and they don’t like living in their 600-square-foot apartment now and they have to rent it out,” said Mr. Ing, who currently rents a condo downtown.
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He said he’d much rather focus on growing his consulting business than worrying about a property, and he believes he’s financially better off by investing the money he has saved as a renter anyway.
Mr. Storey said he advises against purchasing a home to anyone who thinks that they’d sell within the next five years.
“The acquisition costs, the land transfer costs, the selling costs, those add up,” said Mr. Storey, who added that it could be financially advantageous to rent in that scenario.
Matthew Grey, vice-president of real estate secured lending at Scotiabank, said there is still something to be said for the stability and control that home ownership provides.
“We’ve seen the net worth of a homeowner in their 30s is around 10 times that of a renter, so that’s a material financial impact,” he said.
Mr. Lichtman agreed, saying the majority of his clients expect to purchase at some point, and the forced savings that come with a mortgage payment and the reduced housing costs when your home is paid off are two major benefits of ownership.
