House prices in Vancouver and Toronto kept climbing for most of the last decade, resulting in various governments making policy decisions such as the mortgage stress test to slow down homebuying. At the start of 2020, prices in Vancouver are still on pause but in Toronto, Montreal and Ottawa prices are on the way up again.

Despite the affordability challenges in these cities, and the flat real estate markets in Canada’s cities that are dependent on the oil industry, Canadians are still extremely confident in the long-term financial prospects of homeownership.  

The new Statistics Canada survey says that most Canadian households (which includes homeowners and renters) are satisfied or very satisfied with the neighbourhoods they live in, and 82.6 percent are also satisfied with their dwelling. But Canadians do move a lot to improve their living conditions – about half have either moved within the last five years or intend to do so within the next five, says Statistics Canada.

“Households living in rural areas were more satisfied with their neighbourhood at 91.4 percent than households living in small, medium and large urban population centres of Canada,” says the report.

“Moreover, households living in small population centres had a higher neighbourhood satisfaction rate than households living in medium and large urban population centres.”

Quebec City and Montreal residents reported the highest satisfaction rates among Canadian cities. The national average satisfaction rate was 85.6 percent. Several cities, including Toronto (82.2 percent), Vancouver (82.3 percent), Edmonton (82.4 percent) and Calgary (82.5 percent) fell just below that level.

The survey says that about 5.1 percent of households – some 747,100 households – say they are living in dwellings that don’t have enough bedrooms for the occupants. Renter households were three times as likely as owner households to report they are living in an unsuitable dwelling. Just over a million households, or 7.1 percent, say their dwellings need major repairs.

The problem of housing affordability has led to some other trends that real estate observers say will become more prevalent. These include inter-generational living and co-living arrangements. 

That would buck the long trend toward smaller households. In 1851, there were 6.2 people living in the average household. That dropped to 4.3 people by 1941 and to 2.5 people by 2011.

Affordability issues are prompting some millennials to move to smaller cities, says a 2019 report by Robert Hogue of RBC Economics. He says there were 13,200 more millennials leaving Vancouver, Toronto and Montreal to areas within the same province than millennials making the opposite move in 2018.

“Buying a home is between 25 percent and almost 50 percent cheaper in the southern Ontario communities to which many Torontonians flee,” says Hogue. “Similar dynamics are at play in Vancouver, where a net outflow of 5,800 people was recorded in 2017 against Abbotsford-Mission, Chilliwack and Victoria – all within a couple hours’ drive (and ferry) from Vancouver. Buying a home in these communities came at discounts of 30 percent to 50 percent relative to Vancouver prices.”

But despite these numbers, Hogue says there is no evidence that high prices are “gutting the ranks of millennials in Canada’s most expensive cities.”

He says for every millennial who leaves for more affordable housing, there are between seven and 12 moving in. The difference is that the newcomers are from other provinces or countries.

“Vancouver, Toronto and Montreal continue to be magnets for young, mobile talent,” Hogue says. “This is the dominant force shaping the urban demographic make-up, not the loss of millennials priced out of the market. Despite some churn in the prime household-forming population, future housing demand isn’t under threat in Canada’s largest cities.”

Although the number of millennials in the major cities will continue to provide a healthy workforce, Hogue says what could change is the rate of young households who own their home.

“High housing prices set an impossibly high bar to clear for many millennials to become homeowners in a big city,” he says. “Expect a greater proportion of them to rent in the future.”

That’s good news for people who have purchased an income property. Another Statistics Canada survey looked at the characteristics of residential property owners who own more than one property. 

This study looked at owners in British Columbia, Ontario and Nova Scotia. About three-quarters of owners owned just two properties. The median age of property owners in Ontario (56) and B.C. (57) was only two years higher than single-property owners. The survey says previously released data shows that residential property ownership in general is evenly distributed between men and women.

Most owned two single-detached homes, regardless of whether the second property was used for income purposes or as a recreational property.