A convergence of factors are driving rental markets in six of Canada’s big cities. New analysis from RE/MAX Canada examines how price appreciation, rapid population growth and lack of affordable supply are putting a chill on home-ownership rates.

Between 2022 and 2024, demand for rental units accelerated. RE/MAX Canada President Christopher Alexander said first-time buyers continue to fall through the cracks, with the average price of a home more than doubling between 2006 and 2021.

“Rental rates that remain above historic levels, the high cost of living, and wages that have not kept pace with price growth pose a serious challenge to buyers hoping to amass a downpayment,” he said. “It’s near impossible for some buyers, even with steady, well-paying jobs. The dream of home ownership is eroding further and faster than their ability to save.”

The Nation of Renters report highlights previous research on how housing shortages are bumping prices upwards and the cost of renting versus buying. According to Ratehub.ca, carrying a $600,000 unit in the Greater Toronto Area, based on a 10-per-cent down payment with a five-year fixed rate of 4.1 per cent and a 30-year amortization period would be $2,665 monthly—only a bit higher than the average cost to rent a one-bedroom apartment in Toronto.

In December 2024, the average price of a residential rental dropped to a 17-month low of $2,109, according to a Rentals.ca-Urbanation report. Yet average rates remain high; in Toronto they’re 2,360 and the highest in Vancouver at $2,512.

On the supply side, The Social Housing Supply Mix Strategy 4A Report, by Toronto Metropolitan University, City Building, University of Toronto and School of Cities, found that Canada was able to build 45,000 federally assisted affordable units in 1971, but it took almost 25 years to build the same number of properties between 1995 to 2019.

A shortfall of housing will continue plaguing most parts of the country also due to the rising population. Between 2006 and 2021, Statistics Canada reported that the population climbed by 17.4 per cent and could reach close to 52.5 million by 2050. Meanwhile, government policies inhibit capable entry-level purchasers.

“We need policies and incentives that support home ownership as a feasible reality for Canadians, not a distant or improbable dream,” explained Alexander. “Each percentage point contraction in the national home-ownership rate represents thousands of Canadians locked out of the housing market.”

Condos offer viable opportunity

Small condo units are viewed as a viable home-buying option as investors face negative cash- flow situations and leave the market flooded with inventory.

“There is an opportunity for first-time homebuyers to absorb these listings,” says Alexander. “While they are small and designed for two people, they may very well be the most affordable entry point to Toronto’s housing market in recent years.

“The move to buy one of these units provides a stepping stone for first-time buyers, by giving them the means to enter the market at an affordable price point. The decision to move can be made in future years when equity gains can pad their progression to a larger condominium or freehold property.”

Vancouver

Depending on the size of the condo and where one lives, some units may not be suitable for young families, such as micro-condos that are currently in development at 400 square feet in Vancouver. Meanwhile, townhome projects in the suburbs are halted for now until there is some clarity surrounding the tariff dispute from the U.S.

“Some first-time buyers are looking at older condominium housing stock built in the 1990s for empty nesters and retirees in suburban areas,” the report states. “These large units, ranging from 1,000 sq. ft. to 1,500 sq. ft., are attracting a growing audience, especially given that many down-sizers are staying put, unwilling or unable to pay the transactional fees now associated with a move.”

Greater Toronto Area

In the GTA, people desire the most expensive home types: freehold, detached, townhomes and row housing, but condos are now the first step to home ownership for many.

More than one in three homes sold in the GTA is now a condominium apartment or townhouse. In 2024, the average price of a condo apartment was $702,858, while the cost of a condo townhouse was about $803,246, down 2.1 per cent and 3.1 per cent respectively from year-ago levels.

Fewer freehold properties have been built in recent years, while buyers are revitalizing older neighbourhoods throughout the city, which is expected to hike lower rise prices.

For condos, the decline in pre-construction starts and an uptick in failed transactions spurred a new climate. “Assignments in the market have soared as a result, with builders abandoning condominium construction and shifting toward purpose-built rentals,” RE/MAX states. “The math simply does not work for developers, given the current cost of construction, especially when factoring in development costs, material costs, labour shortages and wage increases.”

Overall inventory levels have climbed in the Toronto Regional Real Estate Board, with an estimated 7,400 active condominium and apartment listings available for sale at the end of 2024 and an estimated 30,000 new units expected to be released by developers in 2025.

Hamilton

Ownership rates in Hamilton have been declining over the years, along with wage growth. A condominium priced at $425,000 can be a challenge for a single first-time buyer, given unrecoverable costs such as maintenance and taxes.

Rentals have become an increasingly common option for younger generations. Even buyers who can afford to own are staying put in their rented units to avoid all the costs associated with ownership. Although, there has been a move to cool urbanized areas outside the city, such as Dundas

Micro condos have been a big component of the Hamilton market in recent years, are losing appeal as demand is limited for the product. Large condo units are in greater demand, but are low in supply. The focus has shifted on construction that is more communal as a result, allowing for several generations to live in one larger unit.

“While a good selection of product is available throughout Hamilton, Burlington and surrounding communities, housing policymakers need to look for new and innovative ways to make home ownership more accessible,” added Conrad Zurini, RE/MAX Escarpment & Niagara.

Ottawa

Affordability has played a large role in the decline in home ownership in Ottawa.

Demand for homes priced between $400,000 and $600,000 remains strong, but supply is limited. Although condos are affordable, they cost more when condo association fees are factored in. Some younger buyers are looking to rent rather than own so they can potentially move. Although, expensive rental rates are making it hard to save for down payments. Other tenants are comfortable with the stability of rent control in buildings older than November 2019 where annual rate hikes are limited.

“Urbanization has led to upward pressure on housing values, with homes in the central area of the city experiencing strong homebuying activity,” said Jason Pilon of RE/MAX Hallmark Pilon Group Realty. “The increase has fueled suburban sprawl, although zoning regulations, development costs and bureaucracy are impacting new housing starts.”

Calgary

Rental costs are comparable to owning in Calgary. As such, home ownership is expected to grow in the coming years. It also helps that the city and province have no land transfer taxes, and overall taxes are significantly lower than in other provinces. More than 41 per cent of homes sold in 2024 moved under the $500,000 price point, according to Calgary Real Estate Board.
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“While Calgary still has issues with supply, migration into the city has tapered, giving homebuyers some much-needed breathing room in terms of decision-making,” said Richard Fleming, RE/MAX Real Estate (Mountain View). “The economy continues to expand, driven by oil and gas and a burgeoning tech sector. ”Lower interest rates are prompting some first-time buyers to take the home-ownership plunge, although the stress test continues to be prohibitive, preventing some buyers from qualifying.