Below the surface: What the latest Canadian Housing Survey data tells us about housing need

The big picture

“The share of households living in unaffordable housing – defined as spending 30% or more of their income on shelter costs – was 22.0% in 2022, virtually the same as it was in 2018 (21.5%), before the COVID-19 pandemic.” – The Daily: Housing affordability in Canada, 2022

If all we had from the latest Canadian Housing Survey data was this headline number, you might be tempted to think the housing crisis is stabilizing. But a closer look at the data for people in greatest housing need shows us that much more is going on below the surface:

• The return to pre-pandemic core housing need rates – Canada Mortgage and Housing Corporation’s key indicator for housing need – shows how income supports helped lower-income households reduce living costs.
• Focusing on overall core housing need rates masks considerable variation in housing challenges between renters and homeowners, especially for renters in the private market and in new units. It also masks differences in housing need within and across provinces.
• No progress has been made in reducing the overrepresentation of equity-deserving groups and certain family structures in core housing need.
• Overall, housing policy efforts over the last few years, including those through the National Housing Strategy, could do better to lift people out of core housing need. The CHS data could also be used to better understand who exactly is in need and what their challenges are.

Context: The Canadian Housing Survey, the National Housing Strategy, and core housing need

The Canadian Housing Survey (CHS) is a relatively new survey conducted every two years by the Canada Mortgage and Housing Corporation (CMHC) and Statistics Canada to monitor housing conditions and experiences across Canada. The data for the most recent cycle, collected between November 2022 and March 2023, was published on September 10, 2024.

The last cycle of the CHS was done in 2021. That assessment of who experienced housing challenges was skewed by pandemic benefits, which temporarily improved the incomes of lower-income households. Unsurprisingly, like Census data, it showed that these income supports were quite effective in reducing core housing need. However, since they’re no longer provided, the CHS data from 2018 is the most appropriate comparator for analyzing trends.

The year 2018 was also the second year of the National Housing Strategy (NHS), which directed billions to a variety of housing initiatives between 2018 and 2022, in part, to remove households from core housing need. Through the National Housing Strategy Act, 2019, the federal government also committed to advance the right to adequate housing, which focuses on improving housing outcomes for those in greatest need.

For context, being in core housing need means that a family’s housing is considered unaffordable, unsuitable, inadequate, or a combination of these factors. Housing is unaffordable if it costs 30 per cent or more of the household’s income, unsuitable if there aren’t enough rooms for the number of people in the home, and inadequate if it’s in need of major repairs.

Importantly, only people who live in one of these situations and do not have other housing available in their area that could meet their needs are considered in core housing need. Other living situations of people who may be in housing need are also excluded: for example, people who are unhoused (since they can’t assess the quality of their built-form housing), students, and people who lived in housing with shared services.

Despite these limitations, core housing need is still one of the better tools we have for understanding the cost and condition of Canada’s housing stock.

If the NHS and other policy efforts to bring down housing costs for more vulnerable populations are having the intended effect, then we should start to see a reduction in core housing need in the 2022 CHS data. However, this doesn’t seem to be the case, and we’ll explore why that might be happening.

What the data tells us about core housing need

Aggregated across Canada, core housing need rates are back to pre-pandemic levels

In 2022, 11.6 per cent of households were in core housing need, up slightly from 11.3 per cent in 2018. This overall figure combines the experiences of homeowner and renter households included in the survey.

Consistent with 2018, most people fall into core housing need because of affordability reasons. In 2022, nearly 90 per cent of households in core housing need experienced unaffordable housing.

This trend in the overall rate of core housing need mirrors the trend in the overall rate of unaffordable housing (22 per cent of households in 2022 versus 21.5 per cent in 2018).

There is likely a higher proportion of people in unaffordable housing compared to people in core housing need because core housing need refers to a broader group of households that experience one or more housing challenges of affordability, adequacy, and suitability. In addition, in calculating core housing need, some households who have unaffordable housing are removed since their unaffordable housing is considered a choice.

Without a specific explanation from Statistics Canada about the differences in these figures, it’s important to consider both the overall core housing need rate along with the overall unaffordable housing rate when thinking about our housing stock.

The overall statistics obscure diverging trends between types of households

As the number of renters in Canada has increased, so too has the number of renters living in core housing need. And unlike homeowners, renters are not building a long-term asset through their spending on housing.

In 2022, 22.1 per cent of renter households lived in core housing need compared to 6.1 per cent of homeowners. We can further separate renters into those who live in social or affordable housing units from those who rent in the private market, as their housing experiences are quite different. While a higher proportion of renters in social and affordable housing experience core housing need, the growth in core housing need for the renter population from 2018 to now is being driven by private market renters (see figure 1).

Lower-income households often have to rent in the private market, given the low stock of non-market housing units available across the country. Unfortunately, we’re not able to see how core housing need rates differ by income level through the public CHS data. But we can look at the experience of renters in the private market as a whole as a proxy for some of the housing challenges they’re facing.

To this end, let’s take a closer look at what’s happening specifically to these renters across the country.

Trends across and within provinces tell very different stories

Looking only at private market renters in Canada, their core housing need rate seems fairly consistent at about 21 per cent.

But this national data masks differences in provinces (see figure 2). The core housing need rate for private market renter households significantly decreased in Quebec between 2018 and 2022, while it increased for these populations living in Ontario, British Columbia, and Alberta.

Looking closer at the regional data in these provinces can tell us more about where core housing need is being experienced.

In Ontario, for example, the proportion of private market renter households living in medium population centres (i.e., populations between 30,000 and 99,999) who experienced core housing need grew significantly, from 18.6 per cent in 2018 to 34 per cent in 2022 (see figure 3). While large urban centres and rural areas also saw increases to the share of these households experiencing core housing need, these increases were not nearly as significant as that seen in medium-sized areas.

This recent trend in rising core housing need among households living in medium population centres seems to be specific to Ontario. Regional differences of this magnitude in a single province deserve more detailed investigation.

Things are bad for renters in new units, but we don’t have much to go on

The data we’ve looked at so far lumps the situations of renters together. In reality, we know that experiences can differ depending on factors like the type of rental housing they live in, where they live, and even how long they’ve been renting for.

In particular, new renters and people who rent previously vacant units can be faced with a very different rental market than longer-term tenants. This is because of rent regulations that typically exclude newly occupied units from pricing guidelines. It’s their situation, and how it changes over time, that helps us understand where things are headed for all renters over a longer horizon.

Unfortunately, the public CHS data does not allow for analysis of the difference between core housing need rates and, by extension, the affordability of rental housing, for tenants in newly occupied units versus longer-term tenants. However, the text of The Daily article shows that Statistics Canada has examined this group internally, and things are not looking good.

“In 2022, new renters who had moved into their dwelling during the previous two years paid an average monthly rent of $1,590, which is 27.0% more than that of existing tenant households that did not move during that time. These new renters (34.3%) were more likely to be dissatisfied with the affordability of their housing compared with all renters (20.8%) in 2022.” – The Daily: Housing affordability in Canada, 2022

Data from the most recent CMHC Rental Market Report supports this finding . In 2023, the average rent for newly occupied (i.e., occupied by a new tenant in the 12-month survey period) two-bedroom units in purpose-built apartments increased by 24.1 per cent, whereas the average rent for comparable units that were not turned over to new tenants increased by 5.1 per cent.

To better understand the realities of the rental market that people are facing, Statistics Canada must prioritize releasing much more granular data about renters in new units.

Equity-deserving groups and smaller families continue to experience high rates of core housing need

In 2022, while the core housing need rate for racialized individuals declined compared to 2018 (11.9 per cent versus 13.1 per cent), it was still higher than the core housing need rate for all individuals (9.1 per cent). By contrast, the core housing need rate for First Nations people living off reserve increased from 11.4 per cent in 2018 to 17.8 per cent in 2022 (see figure 4).

Turning to household structure, one-person households and one-parent single family households continue to have much higher core housing need rates compared to all household types (see figure 5). This finding is not surprising, since these family types can have the same housing needs as others but aren’t able to benefit from the economies of scale that comes with having more than one income in the household. It’s also consistent with poverty data, which shows that working-age unattached single individuals and single parents have the highest rates of poverty in Canada. Note that minor changes in the rates between 2018 and 2022 are well within the survey’s margin of error.

What this all means for policymakers

Overall, the results from the latest cycle of the CHS tell an important story that shouldn’t be ignored.

First, they show us where policymakers should focus their efforts to improve housing outcomes for people in greatest need. This includes making greater investments in non-market housing, exploring ways to enhance income supports, and working with other governments to strengthen rent regulations.

They also show the areas in the data that Statistics Canada and CMHC need to explore further. These areas include how housing challenges vary by income level, the driving factors behind provincial and regional differences, a comparison of rents for renters in newly versus previously occupied units, and a closer look at the experiences of equity-deserving individuals and communities. The more recent deeper dive analyses into this data that Statistics Canada has done are a good start, but it’s clear there’s a need to continue this research over the longer term to better understand trends.