An important article about the relationship between rental accommodation and the boomer generation was recently published by The Globe and Mail, and we want to share its principal findings with you.
The article opened: “For a country that worships home ownership, we have a surprisingly diverse and fast-growing population of renters. The percentage of people renting increased in every age group over the past decade.” It went on to detail that while young people and city-dwellers still account for most renters, the biggest area of growth has come from baby boomers and those in smaller cities. That’s right – boomers in the suburbs are moving into the rental market!
Four Reasons Renting is on the Upswing
There are four reasons why renting has grown in popularity:
- Inflated house prices.
- An ageing population – in other words, baby boomers.
- The growing number of people who live alone.
Citing a report by Rentals.ca, an earlier story in The Globe and Mail stated:
“In July, the average monthly rent in Canada had risen by 10.4 per cent – to $1,934 – compared with the same time last year…However, some cities have seen costs surge well above the national average over the past 12 months. In Victoria, rents for all property types reached an average of $2,667 in July – a 27-per-cent increase from the year before. Hamilton, Kitchener, Ont., Toronto, London, Ont., and Burnaby, B.C., all followed close behind, with rents increasing by roughly a quarter over the previous year in each city. Meanwhile, in Vancouver, the average rent in July was 16 per cent higher than a year earlier, sitting at just under $3,118 a month, the most expensive rent, on average, in the country.”
According to RBC Economics, the number of renters in Canada has increased at three times the rate of homeowners in the past 10 years, a period when the average resale house price jumped 90 per cent.
Owners still outnumber renters by 2:1, but the pool of people who rent increased by 876,000 households in the past decade while the number of owners grew by 770,000.
One of the key findings in the same report is that baby boomers have surpassed millennials as the fastest-growing rental demographic. Almost a quarter of rental units were occupied by seniors last year, up from 19 per cent in 2011.
The explanation for this staggering increase in prices is three-fold: high demand, inadequate supply and greedflation. The latter is a term that was coined mainly to describe the rise in cost of groceries and the grocery chains who’re profiting from inflationary times. However, it could in fact be a term to describe the behaviour (perhaps understandable, in some cases) of some people or corporations who own rental properties/income suites and have raised rents precipitously to meet and then exceed their own rising costs.
Renting is Becoming as Unaffordable as Owning
Possibly the only group likely to emerge from this mess unscathed are, as The Globe and Mail reports, those with “the financial clout to pay the going rate. That would be boomers who cash out of their family homes with enough to comfortably rent for the rest of their lives.”
What we’re heading for is a situation where renting is fast becoming as unaffordable as owning. In other words, renting will become inviting to the financially privileged few – but out of reach for those with less resources. It’s not an enviable prospect.