“Better Off Renting” Scotiabank Claims

As discussed in the Jurock newsletter:

Steadily rising home prices are tilting the economics of housing in favour
of renting over home ownership, according to the latest Real Estate Trends
released this week by Scotia Economics.

“The affordability gap between renting and owning is at its highest level
since 1990,” said Adrienne Warren, senior economist, Scotiabank. According
to the report, the difference between the typical monthly mortgage payment
on an average resale home in Canada and the average rent on a two-bedroom
apartment is currently over $800 – up from about $575 last year and as low
as $250 per month in 1997. The bank said the buy-over-rent premium in
Vancouver is the highest in the country, at $1,220 per month. Between 2000
and 2005, renters’ shelter costs increased at an average annual rate of
1.3%.

Homeowners’ costs, on the other hand, rose an average 2.7% yearly. Rising
home prices have been a major inflationary factor, but homeowners have also
faced relatively larger increases in insurance premiums and maintenance
costs.

“Meanwhile, an increase in the homeownership rate and the addition of
investor-purchased condominium units to the rental stock have lifted vacancy
rates and slowed rent increases.” said Warren. “Ownership costs are climbing
faster than rents in all 16 markets tracked by Statistics Canada with the
exception of Charlottetown.”

In downtown Vancouver, Nic Meyer agrees with the above and reports that
rentals are being absorbed very quickly with strong demand from a quality
tenant base.