Ontarians on the Move, 2021 Edition. #7 — An influx of young people to Ontario is creating the need for apartments and condos.
Seventh in (what I hope) will be a series on population growth, migration, and what’s going on with Ontario’s housing market. Previous piece: #6 — We need to pay attention to migration patterns and “drive until you qualify”. Here’s why.
TL;DR version: Over the past five years, Ontario’s population has increased by over one-million residents. Half of those were people, aged 16–31, who moved to the province either through immigration or non-permanent residency (which includes international students). An influx of talented young people is a great thing for the Ontario economy, and helps explain the boom in 1 and 2-bedroom apartments and condos.
One of the most common reactions I get to this series is, “The real problem is we’re building so many one-bedroom condos. If we stopped building those and built larger units instead, we wouldn’t have this problem”.
This piece is going to argue that the one-bedroom condo and apartment boom may have actually made sense and, in fact, pre-COVID we may have been not building enough of them.
[Looks around nervously] Okay, put down the tomatoes and hear me out.
Let’s go back all the way to Part 2 of this series, where I posted this chart on Ontario’s sources of population growth over the past five years:
Between 2015–20, Ontario added over 820,000 people, on net, through immigration and non-permanent residency. This is up substantially from the 456,000 that were added in the previous five-year period.
But what do we know about these new residents? One thing Statistics Canada can tell us is their age. Here’s a chart showing the net increase in population, over the past five years, from non-permanent residents.
Almost 100 percent of the 290,000 person in the number of net new non-permant residents in Ontario are among people between the ages of 18 and 24.
Want to know why there was (at least, pre-COVID) so much demand for 1-bedroom properties? This is why! We can’t bring in an extra 290,000 young adults, in just five years, and expect that it won’t play havoc with the condo and rental market.
And now let’s add immigration to Ontario into the mix:
This population skews older, but only somewhat, with the biggest cohort being in their late-20s. When we consider that a lot of these new Ontarians started out as international students in the province, this makes a great deal of sense. Bright young students move to Ontario at age 18 or 19, go to college or university, work for a year or two on a visa, and obtain Canadian citizenship in their late 20s.
In total, that’s an additional 500,000 people, between the ages of 16 and 31, moving to Ontario in just five years.
HALF A MILLION NEW YOUNG PEOPLE. IN ONLY FIVE YEARS.
There’s all kinds of things going on in Ontario’s condo and rental market; I’ll leave that for others to discuss. But all I’ll say is that when we’re talking about “why are building so many 1-bedroom units”, this influx of new Ontarians should be at the top of our list.
This influx of new Ontarians is fundamentally changing our demographics (and in my opinion, for the better). If we look at the distribution of Ontario’s population by age in 2020, as compared to 2015, we can see the twin impacts of population aging and this influx of talented young people:
Notice that bulge of 20-somethings in the 2020 line which was just a blip in 2015? This effect becomes particularly noticable if we look at the difference between the two lines:
Recall back in #4 — It’s Mostly Young Families, not Retirees, leaving Toronto, I constructed ten age groupings, of roughly equal-size. Here’s the population growth in Ontario from 2015–20 for each of those age groupings:
We see big population increases in college-aged Ontarians and those somewhat older. The cohort of people in their 40s and 50s is shrinking, in large part to the baby-bust of the late 1960s and 1970s.
This piece has been focusing on the growth of the population of younger Ontarians, but the decile experiencing the largest growth (in absolute terms) is people over the age of 71, as the baby-boomers get older. This is also going to increase the kinds of properties in demand, as older Ontarians downsize with some choosing to live in retirement condiminiums.
This is all a very long-winded way of saying: a combination of an influx of young residents and an aging population is driving up the demand for condos and apartments.