Dynamics of affordability and immigration in the Canadian housing market

• DOI: https://doi.org/10.1108/IJHMA-04-2021-0037
• Published date: 19 July 2021
• Date: 19 July 2021
• Pages: 709-732
• Subject Matter: Property management & built environment,Real estate & property,Housing markets
• Author: Vikkram Singh

Dynamics of af‌fordability and

immigration in the Canadian

housing market

Vikkram Singh

Ted Rogers School of Management, Ryerson University, Toronto, Canada

Abstract

Purpose –This study aims to make two major contributions. First, given the literature gap in housing

unaffordabilityfor different immigrant groups in Canada, it makes an essential contributionto the literature.

To the best of the knowledge, this study is the f‌irst studyof its kind to examine housing unaffordability by

examining differentimmigrant groups. Second, differences in unaffordabilitycan help understand the decline

in welfare, as it can have f‌inancialimplications and a negative impact on health outcomes.Third, this study’s

f‌indings are valuable for policy formulation to improve immigrant integration and ease the housing

unaffordabilitycrisis.

Design/methodology/approach –This study examines the determinants of housing affordability to

investigate differences among various immigrant groups in Canada. A bivariate logit model using public

microdata from the Canadian census estimates the determinants of moderate and severe unaffordability.

Additionally, the separationof tenants and owners provides insightsinto the dynamics of unaffordability. The

results show signif‌icant differences between immigrant groups with higher levels of unaffordability among

Asian immigrants. The insights can help devise and implement housing assistance programs to address the

challenges arising fromthe post-COVID-19 pandemic phase.

Findings –The results indicate that unaffordability declines with increasingage, education and full-time

employment. Gender dynamicsare evident, with women faring worse than men regarding thelikelihood of

extreme housing unaffordability. Households face a greater likelihood of unaffordability in more populous

provinces and larger census metropolitan areasthat struggle with the high cost of living, racial disparities

and low income. Immigrants, especially from Asia, Africa and the Middle East, continue to struggle with

chronic andsevere unaffordability issues. The impactis much more severe for those renting, exemplifyingthe

strain it is taking on the f‌inancialhealth of recent immigrants.

Originality/value –Given the literature gap in housingunaffordability for different immigrant groups in

Canada, it makesan essential contribution to the literature. To the best of the knowledge,this study is the f‌irst

study of itskind to examine housing unaffordability by examiningdifferent immigrant groups.

Keywords Housing affordability, Immigration, Logistic regression, Canada, COVID-19, Renting

Paper type Research paper

1. Introduction

Immigration is an important driver of Canadian population growth, with 22% of the

population identifying themselves as f‌irst-generation immigrants (Statistics Canada, 2017).

For new immigrants, homeownership represents a typical process of integration into

Canadian society (Teixeira and Halliday, 2010). The suburban nature of Canadian

homeownership and the intention to establish a footprint in the adopted nation precipitate

the need to buy a home. In addition, homeownership facilitates the accumulation of family

assets and promotes intergenerational wealth transfer, which is important in certain

The author acknowledges the Ted Rogers School of Management Research Development Grant and

the research assistance of Joshua Chobataru and Huilu Shi.

Dynamics of

af‌fordability

and

immigration

709

Received6 April 2021

Revised20 May 2021

Accepted26 May 2021

InternationalJournal of Housing

Marketsand Analysis

Vol.15 No. 3, 2022

pp. 709-732

© Emerald Publishing Limited

1753-8270

DOI 10.1108/IJHMA-04-2021-0037

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/1753-8270.htm

cultures (Vallejo and Keister, 2020). Yu and Haan (2012) note that while newly arrived

immigrants are more likely to live in rental housing, their demand for homeownership

increases signif‌icantly after10 years. Studies, however, point to the growing diff‌iculties for

the immigrant populationin securing the dream of a family home as housing affordabilityin

Canada worsens (Clementson,2017) and debt levels rise (Cheung, 2014).

Higher housing costs disproportionately affect low-income households, such as new

immigrants, as they reduce their disposable income and overall economic well-being. In

particular, the preference of immigrants for living in larger populations, such as Toronto

and Vancouver with established ethnic enclaves, further deteriorates affordability.

According to Hiebert (2015), despitethe high level of homeownership among the population

(68% in Toronto and 65% in Vancouver), housingaffordability remains a pressing issue in

these two markets. Canadian housing affordability has fallen to its worst levels in thepast

30 years, with a staggering 88.4% of household income needed to cover housing costs in

Vancouver and 75.9% in Toronto (Hogue, 2019). Housing affordability ranks at the top of

immigrants’mostpressing needs in Canada (Scwartz, 2010;Teixeira, 2014).

While housing unaffordability impacts all segments of Canadian society, it has a

disproportionate impact on immigrants. It remains a major policy concern, as it implies

considerable f‌inancial hardship, coupled with a higher propensity for poverty and poor living

conditions (Crane and Warnes, 2000;Quigley et al., 2001;Moore and Skaburskis,2004). Although

policymakers at all levels of government recognize the need to address housing affordability

problems among immigrants, there is a lack of systematic understanding of how new Canadians

approach housing decisions. While several studies in the literature deal with affordability in

immigrant housing and the underlying causes, they do not examine whether affordability differs

among immigrant groups. The risk of lumping all immigrants into a homogeneous category

prevents a deeper understanding of how the decision to purchase housing varies among Canada’s

immigrant population. With this signif‌icant research gap in the literature, this study addresses

the following research question:

RQ. How does housing affordabilitydiffer among immigrant groups in Canada?

This study makes three major contributions. First, given the literature gap in housing

unaffordability for different immigrant groups in Canada, it makes an essential contribution to

the literature. To the best of our knowledge, this study is the f‌irst study of its kind to examine

housing unaffordability by examining different immigrant groups. Second, differences in

unaffordability can help understand the decline in welfare, as it can have f‌inancial implications

and a negative impact on health outcomes. Third, this study’sf‌indings are valuable for policy

formulation to improve immigrant integration and ease the housing unaffordability crisis. For

example, the f‌indings can facilitate targeted policy measures to benef‌it the most vulnerable

groups of immigrants. The ongoing COVID-19 pandemic h as also led to a disproportionately

negative impact on visible minorities, with many struggling with the pandemic’s challenges from

working as front-line and essential workers [1]. Thus, further insights into the challenges this

group faces are needed to assist in the post pandemic recovery phase.

The paper is structured as follows. In Section 2, a literature review investigates housing

unaffordability and immigrants in Canada. Section 3 discusses the methodology and data, Section

4 discusses the model results and ends by providing the resultsand a conclusion in Section 5.

2. Literature review

The housing market is a conglomerate of different submarkets def‌ined by structural and

locational attributes,which typically involve inelastic demand and low supply over different

periods (Adair et al.,1996). It contains product market characteristics that create a platform

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