Posthaste: Canadian renters are getting squeezed more than homeowners, putting the property ladder further out of reach
The housing crisis in this country has hit all Canadians but no one as hard as renters, argues a new report from Royal Bank of Canada.
The high cost of acquiring a home combined with the rising cost of living have blocked more Canadians from accessing a property ladder that has been the primary source of accumulating wealth in this country for the past 30 years, says RBC economist Carrie Freestone.
“Canadian renters are getting squeezed more than homeowners, making home ownership an even more distant dream. This threatens renters’ path to accumulating wealth — which could exacerbate inequality over the longer term,” she said.
The gains renters are missing out on are substantial.
Almost half of the household wealth accumulated in Canada over the past three decades has been driven by residential real estate, Freestone said in her report.
Since the end of 2010, homeowners’ net worth has grown from nine times disposable income to 13 times. During that same period, renters’ net worth grew from three times income to 3.5 times.
Renters, who historically have lower incomes than homeowners, got a brief reprieve during the pandemic. Government aid and few opportunities to spend during COVID-19 lockdowns allowed both renters and homeowners to bulk up their savings.
That led to “exceptional wealth accumulation” by the second quarter of 2023, with the net worth of homeowners rising 34 per cent and renters 23 per cent.
But there was a turning point in the third quarter of that year, and renters were hit the hardest, said Freestone. Wealth declined and renters were once again spending more than they earn each quarter.
Collectively, renters spent 9 per cent more than they were earned in disposable income in 2023, while homeowners were
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