Should we rent or buy?

Statistics show that most new migrants either stay with family members or rent apartments or houses upon arrival in Canada. Many continue to rent, but a significant number choose to purchase a home of their own within three years of arrival.

What are the rental markets like?

Canada Mortgage and Housing Corporation (CMHC) provides extensive market research and Canadian housing statistics for potential renters and buyers.

In a Rental Market Report, dated Spring 2009, CMHC states that “the average rental apartment vacancy rate in Canada’s 35 major centres increased slightly by 0.1 of a percentage point to 2.7% in April 2009, compared to April 2008”.

A number of factors contributed to the overall upward pressure on vacancy rates. “Some renter households, who purchased homes, such as high rise condominiums, vacated their rental units once their new home was completed. Also some of the condominiums that were completed between April 2008 and April 2009 were purchased by investors who will rent them out,” added the report.

The current economic climate is also responsible for this scenario: the financial crisis has caused demand for homeownership to moderate, putting some offsetting upward pressure on vacancy rates, when compared to April 2008.

CMHC research shows that the highest average monthly rents for two-bedroom apartments were in Vancouver (CA$1,154), while the lowest were in Saguenay (CA$494). Overall, the average rent for two-bedroom apartments in existing structures across Canada’s 35 major centres increased 2.9% between April 2008 and April 2009.

Should we buy?

One of the hallmarks of assimilation into any new country is the purchase of a home. A home purchase can establish a further degree of permanence and can foster pride and a sense of belonging in the newcomer.

There are indications that migrants are more likely than native-born Canadians to place home ownership as a priority and are willing to make larger sacrifices to make home ownership a reality. The age at which home ownership is undertaken has been on a downward trend for years. Younger migrants are buying more homes than in the past, though most present home owners have been in the Canada for a decade or more.

An important contributing factor in home ownership by migrants is the fact that interest rates are lower than in the past, as the global financial crisis has pushed Canada’s central banks to ease global monetary conditions. Ownership becomes not only a more attractive option for financially qualified migrants, but may well be a more attainable.

Whether renting or buying, migrants are stimulating growth in many areas of Canada. Housing and employment opportunities are moving in a positive direction, each causing growth for the other.

SOURCE: Spring 2009 Rental Market Report – CMHC