National Household Survey: Home ownership holding steady across Canada as affordability ‘becomes an issue’

By Derek Abma, Postmedia News September 11, 2013 - OTTAWA - About seven in 10 Canadian households own their homes, a number largely unchanged in recent years, according to data released Wednesday by Statistics Canada. The latest National Household Survey data found that in 2011 approximately 9.2 million households were owners, pegging the national homeownership rate at 69%.

While not directly comparable, the findings indicate a similar level of ownership to the 2006 census, which revealed a homeownership rate of 68.4%.

In recent years, affordability is becoming an issue

The latest data show the continuation of a trend of rising homeownership rates over the last several decades.

Benjamin Tal, deputy chief economist at CIBC World Markets, was expecting an increase in homeownership to be shown in the new data. However, he said it would likely be a smaller rise than many expected largely because of rising home prices cutting into affordability.

“In recent years, affordability is becoming an issue,” Tal said.

Data from Canadian Real Estate Association showed the average sale price of a listed home in Canada this July was $382,373. In 2011, it was $362,304, up from $276,901 in 2006.

Douglas Porter, chief economist with BMO Capital Markets, also anticipated a rise in homeownerhip. He noted that there were setbacks in the housing market during the recession of late 2008 and early 2009, but unlike in the U.S., Canada’s real estate market saw a strong comeback after that.

Porter cited historically low interest rates as the main factor driving more people to homeownership.

“Interest rates, of course, have been coming down for about a 25-year period from the early 1980s up until 2006, and that brought homeownership within reach of more folks, somewhat offsetting the increase in prices,” he said. “Since that point we’ve had another rise in prices but we’ve also had another downward lurch in long-term interest rates to the point where they were at or close to all-time lows by 2011.”

The Statistics Canada survey showed homeownership rates increase alongside people’s age prior to their retirement years, at which point it plateaus before starting to decline.

For households where the person responsible for paying the bills was younger than 35, 46.9% of households owned their home. That number rose to 69.1% for those ages 35 to 44, and 74.7% for those 45 to 54. The homeownership rate peaked at 77.1% for those ages 55 to 64, and then declined to 76.2% for those ages 65 to 74, and fell further to 70.5% for ages 75 and older.

“Generally, the rule of thumb is the older you get, the more likely you are to own a home, up until a certain point, and then, of course, it tips over the other way if you get well into the senior years,” Porter said.

Not surprisingly, income also correlated with homeownership rates. Among households with an annual income of $100,000 or more, the ownership rate was 90.6%. That fell to 82.9% for those making $80,000 to $99,999 and declines steadily to just 37% for those earning less than $20,000.

Geographically, ownership rates were highest in the Atlantic region. Newfoundland and Labrador, at 77.5%, had the highest homeownership rate among provinces while Quebec had the lowest rate among provinces at 61.2%. Nunavut’s homeownership rate was the lowest among territories at 21% — the only region where the ownership rate was less than 50%.

The Oshawa, Ont., area had the highest homeownership rate in the country at 79.6%, while Sherbrooke, Que., was the lowest at 54.9%.

The voluntary nature of the 2011 survey leaves gaps in the data from groups that tend not to respond to voluntary surveys, including aboriginals, new immigrants and low-income families. While experts believe the data should provide a fairly accurate broad picture of Canada, statisticians and economists warn the smaller the group surveyed, the less reliable the information.

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