Immigration Pushing a Renter’s Revolution in Urban Ontario
By Digital Aptech - Dec 07,2021
Canada is seeing a rise of international students, is intent on bringing up to 1.3 million people in the next 3 years, and is experiencing an out of control spiral in housing prices that is pushing many current residents out of the home ownership market.
Immigration on the Rise
To say that Canadian immigration is on the uptick would be a severe understatement. The Pandemic’s impact on global travel, immigration and the economy would likely cripple immigration flows. 2021, and the covid-aftermath ripples that we’ll experience through 2022 might give pause to investors looking to buy up property to rent out to new entrants.
How many are coming?
In fact, Canada’s immigration numbers bounced back up to their pre-pandemic state already by the first quarter of 2021. In the big picture, Canada’s plans are to open the gates wider than before to bring in more immigration– over 400,000 people each year for 2022, 2023, and 2024.
Who is coming over?
There’s a lot of reasons why Canada can expect to fulfil this quota and bring in over 1.2 million people by 2024. For starters, Canada has secured itself as a top destination for international students, with an especially large number of them coming from India and China. Out of the yearly intake of immigrants, about 1/4th of them will be family-based immigrants and over 50% will be economic immigrants. In short, a lot of the people coming in are here to study, work, raise and continue their families.
Where & How Do They Settle?
Unsurprisingly, Canada’s biggest cities are hotspots for immigration. Toronto, Ottawa, and Hamilton get the most coming in. However, farther-out cities like London are also getting attention due to the lower rental rates they have.
Renting Vs. Owning
About 1 in 5 immigrants purchase a home when they arrive, according to a report from Royal LePage. If that report’s findings are still true, then 20% of 400,000 people are going to be trying to find homes. Statistically, they’re likely to be in their working prime as well since the average age for immigrants coming to Canada is about 28, with a big population bracket belonging to students who plan to stay after getting their degree.
Young, educated professionals looking to own a new home in Ontario will no doubt be looking at their options. Starting off, plenty of new condos in Hamilton are priced in the mid-to-high 300s, and the city is seeing tons of new developments all over its boundaries. For example, The Pasadena Condos are selling in the low 300s in an already developed neighbourhood. These are starting homes that are ideal for newer Canadians who are looking for a place where they can settle down and use as a starting point to build real estate equity and pursue their career.
Renting’s Vast Importance
If 1 in 5 new Canadians are buying their first place, that means about 80% are renting when they start off. Thus, rentals are a very important component of most immigrants’ lives for their first several years in the country. For a great number of them, renting is the primary means through which they’ll have a home for the foreseeable future.
Renting for Urban Communities
Jobs and social networks– especially developed ties to communities that share ethnic and cultural bonds, are something best found in larger cities. If a couple wanted to move on from renting and have their monthly payments go into equity instead, they could always get a new condo in Guelph, like for example the Reign Condos which start at $350,000~. But this means eschewing those cultural ties and being in a place that makes it challenging for you to practice your social and cultural rituals.
So for many new Canadians, renting will stay as the primary means of home ownership. If places like Ottawa are renowned for being ideal destinations for new immigrants to Canada, then pre-construction condos in Ottawa are a safe bet for investors trying to secure a foothold in a hot market that doesn’t carry the weight of Toronto’s pricing. The James House Condos in Ottawa are an example of a higher-scale Condo development set for occupancy in 2024, which is at the tail end of Canada’s anticipated immigration surge.
Challenges with Renting
Real estate brokers that specialize in serving the housing needs of new residents of Canada can run into a lot of challenges when it comes to helping their clients secure a first place. A lot of rentals for new condos in Toronto will usually require a person to provide several documents as surety. Even older, refurbished homes made into apartments will ask the same.
However, a slew of immigrant support services exist that help connect people with the information they need to ensure they have whatever documents are necessary to secure a home. Moreso, brokers are encouraged to set up or join already-existing establishments that seek to educate newcomers on these matters.
In summary, investors who buy in on pre-construction condo developments, or buy new condos now, will benefit from a seller’s market for the foreseeable future.Rental prices are expected to continue to climb, and so too will demand, for a few reasons.
Canada’s position as a top destination for international students.
This brings in huge waves of people who need a place to live for at least 4 years, a number of whom plan on working and staying after school.
Canada Plans on Bringing in 400,000+ Immigrants a year
To a total of 1.2-1.3 million people, tremendous amounts of young and hard-working people are going to be on the path to becoming citizens of Canada.
Rising Housing Prices push natural-born Canadians out of the housing market.
Generations of Canadians who are unable to leverage the value of their parents’ home. First generation citizens for example.
This is exacerbated by the fact that when the large volumes of immigrants coming to Canada have children themselves, they will likely still be renters. If they bought a home by the time their kids move out, it’s likely they won’t have paid off their home or were in a position to sell. As such, their children would likely spend a number of years renting as well.
Urban Ontario is looking to be a rent-seller’s market for the foreseeable future. Investors who invest in condos even in the lower 300s and up will be securing a place that they can expect to be filled at most times. Young Canadians, international students, and immigrants will amplify Canada’s real estate supply crisis and be the justification for ever-increasing rental pricing.