Royal LePage’s CEO Phil Sopher says they will, with time.
“In Alberta there was a housing correction in 2015, in B.C. it was in 2016, and Ontario in 2017. In each of these cases, home prices flattened right out, so it’s going to get better for homeownership in the most expensive places because incomes and salaries will have a chance to catch up to rising home prices, and that’s what market corrections do,” he said.
Soper alluded to a study commissioned by Royal LePage and conducted in tandem with Leger Marketing, in which 87% of millennials expressed desire to own a home one day. Barring another astronomical spike in housing prices, their desires should come to fruition.
“With 87% wanting to own a home, a lot of people are saving and eventually will be moving into ownership, but they have to live somewhere in the meantime, so they will be focused on renting,” Soper added.
However, while joining the ranks of homeowners hasn’t been an easy task in recent years, it’s been nearly as cumbersome to find rental accommodations. The increased cost of ownership pushed people into the rental market, but there’s a pronounced scarcity of rental lodgings, particularly in Toronto and Vancouver.
“There really isn’t a widespread movement of a material number of people moving from ownership to rentals in Canada simply because we don’t have the rental accommodations to accommodate them,” said Soper. “The rental vacancy rate is 0.9% in Vancouver. The other challenge in Ontario with the newly instituted rental control policy, that’s province-wide, is there will be fewer purpose-built projects coming on stream. Many that were on stream at the beginning of the year have been cancelled. While we would see more people looking at renting, it’s not a very plausible alternative in our biggest cities.”
Alternative living arrangements are on the rise. Some are typical, like living with a roommate, and some atypical, like multiple families sharing a home, whether rented or owned
Soper says the challenges facing Toronto and Vancouver don’t differ from New York’s, London’s, Mumbai’s nor Shanghai’s, but he noted that the ranks of long-term property investors are being filled by legitimate entrepreneurs.
“Entrepreneurs, small business landlords who might own as few as one unit or half-a-dozen, have been filling in the gaps,” he said. “It’s a form of RSP for these people; it produces a steady stream of income, and over their working years they pay off the mortgage and have an asset they can sell and retire on. We have many, many of these people in Canada who are essentially buying condos and renting them out because there’s a demand of accommodation.”
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As Alberta, B.C. and Ontario have borne witness to market corrections over the last couple of years, residents have held their collective breath hoping they’ll be able to enter the housing market. But will they?