Housing

Percentage of Households Spending 30% or More of

Income on Housing

Significance

• Canadians who allocate a high proportion of their income for housing are more vulnerable to an abrupt change in financial circumstances.

• Households may spend a large proportion of their income on housing for the follow reasons: – housing prices are high; households value housing for

consumption and/or investment purposes; or households are poor.

Core Indicator

• The two indicators for measuring household spending on shelter distinguish between renters and home owners: – Proportion of households spending more than 30% of

income on gross rent (renters)– Proportion of households spending more than 30% of

income on owner’s major payments (home owners)

• In Canada, approximately 40% of households who rent, and 17% of home owners spend more than 30% of their income on housing.

Renters in Canada’s Major CMAs

• “Gross Rent” includes: monthly rent payments, electricity, heat and municipal services.

• At the CMA level, Québec had the lowest proportion of households spending more than 30% of income on gross rent at 33.0 %, 7.3 percentage points lower than the national average of 40.3% (see following chart).

• On the other hand, in Kingston nearly half (48 %) spend more than 30% of their income on gross rent, a rate 7.8 percentage points higher than the national average.

Percent of Households Spending More than 30% of Income on Gross Rent for Major CMAs, 2005

Source: Census, 2006.

Kings

ton

Toron

to

Halifax

St. J

ohn's

Hamilt

on

Londo

n

Victor

ia

Vanco

uver

Ottawa

Sudb

ury

Canad

a

Calgary

Kitche

ner

Edmon

ton

Mon

tréal

Win

nipe

g

Québe

c0.0

10.0

20.0

30.0

40.0

50.0

60.0

The Impact of Average Rental Costs

• One of the major reasons for households spending a high proportion of their income on gross rent is simply that rent is relatively more expensive in some cities (see following chart).

• Other factors could be that households are choosing to live above their means, and/or high price of electricity bills, heating bills, or other municipal expenses

Comparison of (1) the Percent of Households Spending More than 30% of Income on Gross Rent

and (2) the Average Annual Rent for a Two Bedroom Apartment as a Percent of Median Pre-tax Annual

Economic Family Income for Major CMS, 2005

Source: CMHC, 2011; Statistics Canada, CANSIM Table 202-0411 (SLID) and Census (2006).

35.0 37.0 39.0 41.0 43.0 45.0 47.0 49.010.0

11.0

12.0

13.0

14.0

15.0

16.0

17.0

18.0

Canada

Per Cent of Households Spending More than 30 Per Cent of Income on Gross Rent

Rent

for T

wo

Bedr

oom

Apa

rtm

ents

as a

Per

Cen

t of

Med

ian

Fam

ily In

com

e

Home Owner’s in Canada’s Major CMAs

• Owner’s major payments include: mortgage payments, condominium fees, property taxes, and municipal service fees (electricity, oil, gas, coal, wood, water, etc.)

• Toronto and Vancouver tied for the CMAs with the highest proportion of households spending more than 30% of their income on housing at 27.1 % (see following chart).

• Quebec had the lowest proportion at 10.6%, followed by Winnipeg at 11.6 %.

Percent of Households Spending 30% or More of Income on Owner’s Major

Payments of Major CMAs, 2005

Toron

to

Vanco

uver

Victor

ia

Calgary

Hamilt

on

Canad

a

Kitche

ner

Mon

tréal

Kings

ton

Londo

n

Edmon

ton

Halifax

Ottawa

St. J

ohn's

Sudb

ury

Win

nipe

g

Québe

c0.0

5.0

10.0

15.0

20.0

25.0

30.0

Source: Census (2006).

The Impact of Average Residential Prices

• Housing prices affect the proportion of income families spend on shelter, which is a result of the fact that housing is a necessity that homeowners are willing to pay for (see following chart).

Comparison of the Percent of Households Spending More than 30% of Income on

Owner’s Major Payments and Ratio of MLS Average Residential Prices and Pre-Tax

Median Economic Family Income for Major CMAs, 2005

10.0 12.0 14.0 16.0 18.0 20.0 22.0 24.0 26.0 28.01.00

2.00

3.00

4.00

5.00

6.00

7.00

Canada

Percent of households spending more than 30% of income on owner's major payments

Ratio

of A

vera

ge re

siden

tial P

rices

and

Med

ian

Fam

ily

Inco

me

Source: CMHC, 2011; Statistics Canada, CANSIM Table 202-0411 (SLID); Statistics Canada and Census 2005.

Renters vs. Home Owners

• Overall, there seems to be more renters than home owners who spend more than 30% of their income on housing.

• The average for all CMAs was 17.1 % of home owners and 41.7 % of renters.

• This indicates that renters are generally poorer than homeowners and, as a result, must spend a higher proportion of their income on shelter.