- by David Clark

A recent editorial in the Globe and Mail stated “A well to-do country’s culture worships home ownership. Its economic policies promote it. Ownership is treated as a mark of success, especially if it’s a single-family home. Apartment living is lesser; renting lesser still.” And last May (2021) a Globe and Mail article about the “real estate frenzy” discusses the FOMO...the fear of missing out on owning a home... stating that “Relinquishing the dream [of home ownership] isn’t easy.”

As a long-time resident of Owen Sound I have noticed an apparent increase in the number of apartment units, both new and buildings being repurposed to apartments. When I first arrived in Owen Sound I rented for about eight years (all units in older houses). Three units I lived in were within a two-block section of a street I now live on. When I married, we bought a house that had been rented and which we subsequently renovated as an owner-occupied, single family home. Today, on this two-block section, there are fifty-five detached and semi-detached residential buildings, of which forty-one are single-family units and fourteen which host apartments. Therefore, 25% are rentals, although there may be additional single-family occupied houses rented out. The fourteen rental buildings contain about thirty-eight rental units. This calculates out that about 48% of the housing on this two-block section as rental units.

This, then, leads to a few questions: What are the percentages of owner-occupied to tenant-occupied residential buildings in Owen Sound?; How does the city compare to other communities and to provincial levels?; and, What characteristics of the community might affect the tenant-occupied to owner occupied rates?

The primary data used to answer these questions is from various Statistics Canada community profiles.
An analysis of the 2016 census indicates that Owen Sound has one of the highest percentages of private rental properties compared to private owner-occupied properties at the provincial level. Rentals include apartment units, rented duplexes, and houses. In 2016 it ranked fourth out of forty-four other communities in Ontario used in this analysis, just five percentage points below Toronto, and just below Cornwall and Brockville. (Note: This does not include social, co-operative, and municipal housing as provided by Statistics Canada’s 2016 Census data.)

Just ten years prior (2006 census) Owen Sound ranked seventh (tied with London) in rentals, just four-percentage points below Toronto. During this ten-year period Owen Sound increased its percentage of rentals (1.2%) while its share of owneroccupied units dropped.

To put this in perspective, the average rental rate for Ontario (2016) was about 31% and the median about 32%. Owen Sound’s rental rate was 43% in 2016, higher than the province's rate, and higher than Grey (which includes Owen Sound) at 23.3%. Bruce was lower at 18.3%.

There are, I suggest, only two types of renters: those who want to rent, it is their preferred housing choice, and those who have no choice but to rent. Having no choice is an economic and supply issue, but mostly, I suggest, is economic. Economic because so many people do not have incomes that meet the threshold to qualify for mortgages, and a supply of affordable houses is not available.

The economic factor is reflected in various community characteristics. Median Income is one such factor. This is the dollar amount at which one-half of the population’s income is above and one-half is below. In 2016 the median income for Owen Sound was about $28,800, ranking fourth from the bottom after Pembroke, Markham, and Cornwall. This was $2,700 lower than the median of the forty-four study communities included in this analysis, and $3,800 lower than for the province.

Owen Sound ranked at the bottom of the Grey-Bruce municipalities, at about $2,900, or about 10-perentage points less than the median for Grey and Bruce. Comparable incomes of other Grey-Bruce communities ranged from Owen Sound’s low of $28,800, to the highest of about $40,000 for Saugeen Shores, a difference of $11,200.

A recent study done for Grey County (undated, c. post-2016) indicated that a part time, minimum wage employee (or household) with an annual household income of between $14,560 and $20,800 could have afforded a maximum house price of only  between $29,000 and $58,000, with a 20% down-payment. A full-time employee (or household) would have needed an annual income of about $100,000, or about $8,300 monthly, to afford a house of about $417,000, again with a 20% down payment.

As to renting, part-timers earning minimum wage and working 20 hours per week, the maximum monthly rent threshold was about $400. For those earning $50,000 a year, the maximum rent rate was about $1,250 and $2,500 for those earning $100, 000.

The above mentioned study is out-of-date already because during the COVID-19 period the housing market saw an extreme jump in prices, with little recent abatement. This was driven by those looking for investment properties as well as “gentrification”, which sees moneyed people move from, primarily larger urban places, to rural areas. This is a well-documented phenomenon. As stated recently in the Globe and Mail, “The greater demand for housing in small communities away from the typical hubs [larger cities] has also sparked affordability crises for those who were living there before the pandemic.” (Emphasis added.) (Note: the two block section I mentioned above, during the COVID-19 period, saw five income properties listed for sale, of which four sold.)

The Grey County study found that 20% of home owners and 50% of renters are “spending more than 30% of incomes on housing”. Thirty-percent is the threshold at which anything above that is a financial stress for the renter or owner, and can lead to housing instability.

There are a number of other community characteristics that can help us understand why rental versus owner-occupied housing rates are high, compared across other communities.

A related characteristic to median and average incomes is the source of income for residents, so either “market income” or “government transfers”. The former includes employment income, investment income, private retirement fund income. The latter includes federal, provincial, territorial or municipal governments such as CPP, employment insurance, social assistance, Old Age Security, Guaranteed Income Supplement, and similar. Of the Grey Bruce communities, fully 82% had percentages of market incomes lower than the provincial average. Income levels of the government transfer type are lower than market incomes. The average market income for the province is $47,890 and the government transfer income is $7,346. The equivalents (rounded) for Grey were $40,000 and $9,000; for Bruce $45,900 and $8,700; and for Owen Sound $35,600 and $9,400. Within Grey and Bruce, Owen Sound had the third-lowest percentage of market income at 80.6%.

Another indicator affecting the median income is the Low Income indicatori, which reflects community low income and poverty. The Low Income indicator for Owen Sound is 7.5%, lower than the provincial average of 9.8%. But, and this is a BIG but, just because Owen Sound is lower than the provincial average does not indicate all is well. Within Grey-Bruce, Owen Sound has the highest Low Income indicator, with two other communities close at 7.4% and 6.8%. Low income pushes people to lower-cost housing, typically renting and shared housing.

The unemployment (2016) rate adds additional insight into a community’s economic well-being and housing affordability. Owen Sound’s unemployment rate (7.4%) was the highest within Grey and Bruce (which were 5.9% and 5.8%, respectively), but at the same rate as Ontario. High unemployment has an impact on the overall wealth of the community and specifically individuals and families. The unemployment rate includes all those actively seeking employment and does not include those that are not seeking work. It has an impact on housing security and the ability to find secure and decent housing.

Statistics Canada also calculates “mobility rates” or movement from one residence to another. This includes internal, inter- and intra-provincial, and non-movers, for one and five year periods. The mobility rate can act as a barometer of housing stability. The 2016 one-year, internal (moving within the city) mobility rate for Owen Sound was 5.9%. It was higher than Bruce County and the province (5.4% and 4.9%, respectively) but lower than Grey County (6.3%). There is a five-year rate as well. Owen Sound was higher than Grey County (16.6% and 18.6%), lower than Bruce County (16.2%), and higher than the province at 12.5%.

The statistical technique of correlations helps us understand better the relationship between various characteristics.
For the forty-four (non-Grey and Bruce) communities in this analysis, there is a general upward trend between the percentage of low income families in a community and the percentage of rental units. In other words, as the percentage of low income families rises, so does the percentage of rentals compared with owner occupied dwellings. Also, higher median incomes are correlated to higher rates of ownership and the inverse is true in that higher rates of rentals are correlated to lower median incomes. And, likely no surprise, a strong correlation exists between low median income and higher rates of low income families.

Internal mobility rates (moving from one residence to another within the same community) are correlated to both total housing units and percentage of low income households. With an increase of total housing units, one and five year internal mobility rates decline, possibly indicating general housing stability. Statistically this is a moderate correlation.

The last characteristic to consider is the range of occupations and changes to the numbers of workers in each one. Statistics Canada uses ten occupational categories to class those aged fifteen years and older who worked. When combined with the average hourly wages for each category, we can get an idea of the economic impact to a community.

For six of ten categories the number of workers declined in total numbers, between 2001 and 2016 in Owen Sound, the categories accounting for 65.7% of all workers in 2016. Similar loss occurred in Grey and Bruce (5 categories each) and overall in Ontario (5 categories). There was gain in three categories for Owen Sound which were in the highest-paid categories, accounting for 21.3% of all workers. Grey had gain in the top four earnings categories while Bruce had gains in three.

Overall, the total number of workers in Owen Sound changed little because some categories lost and some gained workers. Net change saw Grey gain while Bruce lost.

There had been, during the 2001 to 2016 period, a number of factors, as shown above, that helped push down Owen Sound’s median income. The overall impact, though, is one of a community that has one of the highest rates of renter-occupied compared to owner-occupied housing in Ontario. And like other communities across Ontario, well in fact Canada, much of the employment available, especially to those entering the workforce, is part-time, minimum-wage, and “gig” contracts, and seems to continue moving in that direction.

Much of the data used here is from 2016 and things have changed a lot recently including significantly higher housing prices, increasing rental rates, and many new builds (apartments and various types of houses). New apartment builds and investment in rental housing come with increasingly higher rents. Real estate sales have been pushed higher from demand, including from gentrification. This adds to housing insecurity, especially for lower income people and families.

One will be hard-pressed to find many people, especially young people, who do not see home ownership as a goal, unless one wants to rent. It certainly was the dream many years ago of my wife and I, and we were able to achieve it. As a single person, though, I rented for many years and moved a lot according to my ability to increasingly afford better quality apartments. The sense of security from owning is significant, especially long-term financial equity in home ownership. Many people look to home ownership to aid in securing a “comfortable” retirement. That seems a reasonable goal.
Owen Sound’s high rent to ownership ratio reflects the inability of people to own.

Owen Sound’s higher rate of rentals is understandable because it is the largest community within the two counties and people tend to gravitate there for services, and, apparently, for the abundance of rental housing.

The economic impact of high rates of rental properties can result in less consumer spending in the community due to people having to spend too much of their income on rent. As stated above, 50% of Grey County renters and 20% of owners are spending more than 30% of income on housing, meaning less money spent in their communities. Many of these people are working at minimum-wage jobs with part time hours. For Owen Sound -and for any community- this is significant economic loss.

Non-resident owners, especially corporations, extract the profits and invest and spend elsewhere. Money may be spent locally on maintenance, renovations, and property taxes but some corporations bring in their own teams to do a variety of functions. A recent retro-fit of a non-resident, corporate owned apartment building, brought workers from out of the area and housed some of them in vacant units. Resident owners, if they hire and contract locally, are better for the local economy than are “big box” corporate businesses. But unless these owners (both corporate and private) hire full-time workers, pay good wages, and spend profits in the local communities, locally-owned becomes  less of a community economic benefit. 

One might argue that the abundance of rentals is a direct result of the demand side of the equation but a shortage of affordable free-hold housing (supply side) is part of the story, but this would require a different analysis than discussed here.

The results from the 2021 census will be telling.
Owen Sound...where you (probably) have to rent.

Low Income Cut-off indicator: “The LICO is the income level below which a family would devote at least 20 percentage points more of their income to food, clothing, and shelter than an average family would. People are said to be in the low-income group if their income falls below this threshold. The threshold varies by family size and community size, Prevalence of low income based on the Low-income cut-offs, after tax...” Retrieved from https://opentextbc.ca

David I.M. Clark - MA, BES, BA(Hon), MAd(Diploma)  Independent Researcher and Builder of Cigar Box Guitars and Basses
Member of Canadian Economics Association