Canadians fleeing major cities was supposed to be a temporary trend, but it’s lasting a little longer. BMO Capital Markets broke down the 2022 net migration data. They found flight from the Big Three markets was still historically strong. The regions are still able to grow with immigration, helping to prop up demand. However, the churn of prime aged workers won’t last forever. Eventually immigrants start to flow to regions managing to win over existing residents.
Canada’s Big Three Cities Are Still Seeing Large Resident Outflows
Canada’s Big Three cities continued to see residents leave for other parts of the country. Toronto’s net outflow is the worst—by a country mile. But Vancouver and Montreal were still seeing elevated losses of residents. Most observers thought this to be a temporary trend related to the pandemic, but it hasn’t slowed much.
“[The outflows are] a touch lower than the prior-year exodus thanks to less flow out of Montreal, but still a big number historically,” said Robert Kavcic, a senior economist at BMO.
Canadian Net Interprovincial Migration
The net migration of residents in Toronto, Vancouver, and Montreal.
Source: BMO Capital Markets; Statistics Canada.
Residents Fleeing Are Younger Families Seeking Better Value
The outflows are attributed to a sudden migration of young adults looking for space. It’s a trend they describe as inevitable, but accelerated by the pandemic.
“As has always been the case, these outflows largely reflect younger families moving out for more space, and COVID accelerated what was already coming because of Canada’s age structure,” said Kavcic.
It’s worth noting “moving for more space,” is code for space one can afford. Flight from cities is typical in real estate bubbles, and there’s a long history of it occurring. Widespread adoption of work from home allows people to move much further out of the CMA, reflected in the data.
Immigration Plugs Outflows, But They’ll Inevitably Flow To Where Young Adults Are
The net outflows aren’t even noticeable at the headline level, with immigration levels. Canada’s big three cities have long been immigration hubs, meaning growth has been easy. Since headline data only sees population change, few policymakers likely notice anything. The City’s coffers are growing, and aggregate output is still rising.
“…international inward migration still dwarfs this outward movement among domestic residents. And there was a resurgence of nonpermanent resident inflows to the tune of 93k in these three cities—hence, still-tight rental markets,” said Kavcic.
That isn’t to say there isn’t a problem. As we mention in interprovincial migration analysis, growth is good—but not all the same. The long-term issue of prime aged workers churning is something to consider. If residents see greater opportunity or a better quality of life, why wouldn’t immigrants move to the new regions providing a better value proposition? This is, after all, how new cities and economic hubs rise and old ones fall behind.