Millennials are looking for breathing room.
The Toronto metropolitan area saw a net loss of 50,375 residents to other parts of Ontario between July 2019 and July 2020, while the Montreal area lost a net 24,880 people to other parts of Quebec. In Vancouver, 12,189 more residents moved out to other parts of B.C. than moved in, among the highest numbers ever recorded.
The COVID-19 pandemic unfolded about mid-way through this period.
Thanks to immigration, the largest metro areas still recorded overall population growth during this period, but they grew far less quickly than many smaller nearby places.
Vancouver’s 1.1-per-cent population growth was outdone by suburban New Westminster (2.8 per cent), while Montreal’s 0.7 per cent growth paled in comparison to nearby Mirabel, growing 3.6 per cent.
It’s not surprising that the pandemic accelerated the exodus from big cities, but the trend began well before that, said Frank Clayton, an urban and real estate economist at Ryerson University’s Centre for Urban Research and Land Development in Toronto.
“There’s been an outflow of Toronto for years as people move out for something bigger,” he told HuffPost Canada.
With the pandemic, “people accelerated the decision a bit,” he added.
Millennials are settling down and having children, and they are following the Baby Boomers in an exodus for more affordable and larger houses in suburbia, Clayton said.
“Millennials’ behaviour is not exactly but pretty much like Boomers, except they’re doing it 10 years later (in life),” Clayton said.
Hence the booming populations and housing markets in places like Kitchener-Cambridge-Waterloo and Guelph, near Toronto, and Abbotsford and Kelowna, not far from Vancouver.
While rental rates are tumbling in the large cities, many of these smaller centres are seeing soaring housing costs. Asking rates for one-bedroom apartments in Toronto dropped 20.9 per cent over the past year, according to rental site Padmapper, but rose by 8.5 per cent in both Hamilton, west of Toronto, and Oshawa, east of Toronto.
One-bedroom rents are down 9.3 per cent in Vancouver, but up a staggering 26.9 per cent in Abbotsford, and 8.9 per cent in Kelowna.
“Demand for housing from the prime home buying group is for lower density housing like single-detached or at least townhouses,” Clayton said. “We’re not increasing the supply of that in Toronto.”
The work-from-home phenomenon also has many businesses reconsidering the high price of downtown real estate. The office vacancy in Canada’s downtown cores has shot up by some 40 per cent over the past year, to 13 per cent, the highest level in 16 years, according to data from commercial real estate agency CBRE.
Clayton believes some of these businesses leaving the core may choose to open small “satellite offices” outside the major urban areas, that would allow employees to avoid long commutes into downtown.
For instance, someone in southwest Ontario, in Kitchener-Cambridge-Waterloo or London, might drive to a satellite office in Milton or Mississauga a few times a week, avoiding the drive into Toronto.
But all this doesn’t necessarily mean the fight against urban sprawl is lost. There are ways to develop growing cities in a more sustainable way, Clayton argues, including a focus on the “missing middle” of housing ― everything in between sprawling suburban homes and tiny condos in high-rise towers.
In that, Clayton has allies in the real estate industry, where many have called for a focus on development of larger apartment units, townhouses and stacked townhomes, as a way of reducing the demand for detached homes.
But with Canada likely to return to high immigration levels once the pandemic is over, cities will have to keep finding space for development, Clayton said.
“You’ve got to have a combination of growing up and growing out. The planners think they can just limit it to growing up. That’s not going to happen.”