The Rich Are Getting Richer and Most of It is Real-Estate Wealth
Income inequality in Canada increased in 2023 according to new data from TD Economics and Stats Canada.
In fact, new data from Q4 2023 reveals that homeowners in Canada now own 91% of all the wealth in the country.
This means that the approximately 33% of the population of Canada who rent now only own 9% of the net wealth pie.
Renter’s Net Worth Falling Further Behind
The disparity between renters and homeowners is also getting larger.
A typical Canadian homeowner’s networth-to-income has grown from 855% in 2010 to 1,111% in 2023, up 256% during the same period, according to Stats Canada data.
Conversely, a typical renter’s net worth as a share of income has only increased by 78%, from 342.5% to 420.9%, during that same period.
Disposable incomes of Canadian real-estate owners has increased by 3.9% since 2022, whereas a renter’s disposable income has only increased by 1.1% during the same period.
In general, renters have less money to spend and save, and their networth is stagnating, when compared to their homeowning counterparts.
Real-Estate Holdings of Top Income Earners Reaches $1M
According to the latest data, the highest quintile income Canadian families have an average networth of $2.1 million dollars, and $1M of this is in real estate holdings.
The lowest quintile of Canadians, however, only owns $240,000 worth of real estate on average, and has a net worth of $363,000.
This disparity has profound implications as the primary residence exemption in Canada means that the wealthiest Canadians will have their networth compound tax free faster than lower income Canadians — this could create a “runaway train” in wealth generation.
Lowest Income Canadians Falling Further Behind Whether they Rent or Own
The data also reveals that the lowest income quintile of Canadians are struggling the most, because of a few factors:
- These Canadians are more likely to rent
- and also face barriers generating wealth as they are not as easily able to buy real estate
- they have more debt
- they have less disposable income to save
The net result is that the gap of disposable between the highest income household in Canada and the lowest income households in Canada is the largest since 2005.
Additionally, the lowest income quintile of Canadians have a household debt to income ratio of almost 300%.
This debt burden mixed with high rents, high interest rates, low net worth, the principal residence tax exemption, and lower savings rates means that the poorest Canadians are likely to fall further behind in the coming months (and possibly years).
