Newcomers and the Canadian Housing Market Crisis: Fall 2024 Outlook

Understanding Canada’s current housing crisis can be crucial for a newcomer’s ultimate success in Canada. It can help you choose the right location to land, setting you on a path to homeownership, which is a long-term goal for many newcomers. In the short term, it can help you find that first permanent rental property with an action plan that can save you time and money.

If you settle in the wrong city, your homeownership dreams may be quashed or delayed indefinitely if you struggle for a downpayment and monthly mortgage payments. Paying super high rents as a newcomer can seriously limit your ability to save money to buy a home. Or you may be forced to relocate after a few years to be able to buy and afford a home. Relocating means finding a new job and uprooting your family from friends, relatives, neighbours, classmates, clubs, and teams.

If homeownership is your goal as a newcomer, you need to understand home-buying prices AND rent prices BEFORE you land in Canada.

Dave Frattini, Managing Partner of Destination Canada Information Inc. (Prepare for Canada and Rentals for Newcomers), says newcomers who want to become homeowners need to pay attention to rental and home-buying housing market trends in the city where they plan to settle.

“The decision to land in a large city like Toronto or a smaller city such as Regina can have a big impact on a newcomer’s plans and ability to save for and eventually buy a house,” said Frattini.

“And always remember that settlement agencies can play a pivotal role in helping you select the city that is right for you, both in terms of employment, rental housing and eventual home ownership.”

A Royal LePage study showed that 82 percent of newcomers choose to stay in their first city of residence. This reinforces the importance of settling in a place where the price of buying a home is affordable! Otherwise, you might be facing a costly (and painful) relocation in 3-5 years in search of an affordable home to buy.

Unfortunately, newcomers who dream of home ownership often pick the wrong landing spot. Home prices in many Canadian cities have climbed steeply in recent years, and rental vacancy rates have reached extreme lows.

A new Angus Reid survey says Canada’s reputation as a welcoming country for newcomers could be at risk, with the ongoing housing affordability crisis hitting immigrants hardest.

“As more immigrants seek the Canadian dream from abroad, many who arrived in recent years have discovered less of a dream and more of a nightmare,” the report said.

The survey found that 39 percent of newcomers who have lived in Canada for less than 10 years seriously consider leaving their province because housing costs are too high.

If you want to own a home in Canada, then you must choose your landing city carefully.

A recent Leger study found that 80 percent of newcomers arriving in the past 10 years discovered after arriving that rents and house prices are more expensive than they thought.

Additionally, it’s taking newcomers longer than expected to find that first permanent rental property. While many hope to be in their first long-term rental within four weeks of arrival, a recent survey by Rentals.ca showed that most rental searches in Canada can now take up to eight weeks!

Finding a rental will take longer than you think, and it may be more expensive than you originally thought, so budget accordingly. This is particularly true for the cost of a short-term rental when you arrive.

Registering for Prepare for Canada’s Accommodation in Canada webinar can help you prepare for the realities of the Canadian housing market.

For immigrants arriving in Canada between now and the end of 2024, the Canadian rental housing market is a mix of good and bad news, depending, again, on where you choose to settle.

Rent prices nationally are not forecast to start falling significantly for the foreseeable future because of historic low vacancy rates (around one percent) in most Canadian cities. However, rent and housing prices vary wildly across Canada, from city to city.

The good news is that rent price increases have slowed in popular large Canadian centres such as Toronto and Vancouver. Due to an oversupply of condos (particularly in Toronto), more rental properties are becoming available in those two cities, and this trend is expected to continue.

In popular mid-sized cities such as Calgary, Edmonton, Saskatoon, and Halifax, rent prices are rising year over year (over 10 percent) as more newcomers choose to settle in these cities, mainly because of cheaper housing prices.

Still, it’s important to remember that despite the rent price increases, Western Canada and East Coast cities remain the best rental bargains in the country for the rest of 2024.

A recent national rent survey confirms that cities such as Saskatoon, Fort McMurray, Regina, Edmonton, and Winnipeg consistently have the cheapest monthly rent.

Similarly, cities such as Vancouver (and those in the Greater Vancouver area) and Toronto (and those in the Greater Toronto Area) are consistently the most expensive monthly.

According to Canadian housing experts, this rent price disparity will be around for a while.

For newcomers looking for affordable housing, the difference in rent prices can be overwhelming.

For example, according to recent rental data, a one-bedroom apartment in Toronto rents for $2,443 monthly.

Meanwhile, a one-bedroom apartment in Saskatoon rents for $1,216.

That’s a difference of $1,227 a month!

A two-bedroom apartment in Vancouver costs $3,666, while a two-bedroom apartment in Edmonton costs $1,716. That’s a difference of $1,950.

The further you settle away from Canada’s three major cities (Vancouver, Toronto and Calgary), the less you’ll pay in rent.

That’s a Canadian rental reality that does not change.

Even in Ontario, the most popular Canadian province with newcomers, the current difference between rent in Windsor and Toronto is almost $1,000 (Windsor is 3 hours from Toronto by car).

In addition to cheaper housing, the cost of living in Canada’s mid-sized and smaller cities can also be significant. For example, insurance, repairs and services can cost less. Fortunately, Canada’s inflation rate is declining at 2.5 percent as we enter the fall season.

But there’s another crucial reason newcomers need to understand rent and housing prices in Canada before arriving: Cities with cheaper rents also have more affordable housing prices.

That’s a fact.

The price for a home in the Toronto region (where rent is $2,443 for a one-bedroom apartment) is $1,089,800.

The price for a home in Saskatoon (where rent for a one-bedroom is $1,216) is $406,500.

That’s a difference of $683,300 in the cost of a home between Toronto and Saskatoon.

The Canadian Real Estate Association (CREA) predicts home sales will pick up between now and the end of 2024. As the Bank of Canada continues cutting interest rates, mortgages are becoming cheaper, which is expected to lure more aspiring homeowners into the market.

And, according to housing experts, new listings are expected to continue rising between now and the end of the year while home prices across the country remain relatively stable.

The housing reality for newcomers to Canada is that everyone starts by renting. After a few years, most (over 70 percent) become homeowners.

And according to a survey by Ipsos Research, newcomers are becoming Canadian homeowners faster than ever.

• Many newcomers to Canada are homebuyers within the first five years of arriving.
• Immigrants to Canada are more focused on owning a home overall than non-newcomers.
• Among the newcomers living in Toronto, 49 percent now own homes after being here less than five years.

The country is still on track to meet its goal of welcoming 450,000-plus newcomers in 2024. Canada plans to welcome another 500,000 newcomers in 2025. Those figures do not include temporary foreign workers or international students. That’s a lot of people looking for rental housing, which means landlords and property managers have their pick of tenants.

It’s important to sell yourself as a tenant. Prepare for Canada has created a guide to help newcomers craft their application forms and listing inquiries so they can stand out in this very competitive environment.

If all of this seems overwhelming, other rental solutions exist in Canada.

Increasingly, newcomers look to gain an edge in finding their first rental by working with certified, experienced real estate agents. This no-cost solution sees the real estate agent find the rental for you. This option is attractive to qualified newcomers focused on finding a job or have arrived with one and are too busy with work and family to look for accommodations.Another rental solution is home-sharing.

If you qualify as a housemate, you live with the homeowner in their home. Being a housemate is cheaper than being a roommate. It offers many more amenities (better housing, location, a knowledgeable, friendly host, etc.) and other advantages.

You can learn about these free options in Prepare for Canada’s  Accommodation Solutions for Newcomers webinar.

• Register for Prepare for Canada’s FREE Accommodation in Canada
• Register for FREE for Rentals for Newcomers.
• Download for FREE Rentals for Newcomers Application Tips Guide