Understanding the Impacts of COVID-Related Rural Population Growth

Date: December 16, 2021

Author: John Anania, Acting Manager, Economic Analysis Unit & Mike Florio, Economic Policy Analyst, OMAFRA

There has been a noticeable change in housing market dynamics within Ontario. Many rural areas are experiencing rapid increases in house prices, with some seeing a doubling in house prices over the last 18 months. Housing affordability, a long-standing concern in large urban centers, is quickly becoming a concern for some rural areas.  

Research at the Ministry of Agriculture, Food and Rural Affairs (OMAFRA) finds population growth is the most significant driver of rural housing markets. Population data capturing the rise in urban households relocating to rural communities because of the pandemic have yet to be released by Statistics Canada but increases in house prices suggest population growth roughly doubled in 2020 in non-major urban (NMU) areas of the province. 

NMU population growth started to increase prior to the pandemic. Between 2005 and 2015 it averaged about 0.5% per year but then roughly doubled to just over 1% between 2016 and 2019 before doubling again to an estimated 2% in 2020. Housing markets simply cannot adjust quickly enough to absorb rapid increases in demand of this magnitude without a rise in house prices. 

To better understand pressures and opportunities arising across rural Ontario due to stronger population growth, OMAFRA and the Rural Ontario Institute (ROI) partnered to deliver a workshop focusing on the implications for housing, human capital, business development, infrastructure, and municipal service delivery. Just over 100 municipal and provincial rural economic development and planning practitioners from across the province participated in the workshop that was held on October 21, 2021.

Some of the key findings highlighted by participants included:

  • Almost all participants reported a strong influx of newcomers since the start of the pandemic; however, the influxes of newcomers were reported to be less prevalent in more remote rural areas. Most newcomers are thought to be from urban areas in Southern Ontario (e.g. Greater Toronto Area and Ottawa). Participants reported that newcomers tend to be a mix of young families and retirees, with young families making up a larger proportion of newcomers.
  • For peripheral and more distant rural areas, these trends are reversing a long period of population stagnation, which had made it hard for municipal governments to accommodate the influx of new residents and related residential development.
  • A lack of affordable housing options is adding to the challenges all sectors are facing with finding and retaining employees, especially within sectors requiring low-skilled labour, as employees cannot find affordable housing. 
  • Teleworking is making it easier for rural areas with broadband to attract human capital.
  • Newcomers are contributing to increases in demand for local food, with farmers expanding to capitalize on these market opportunities.
  • Some rural municipalities are facing increased pressure to upgrade their infrastructure assets (e.g. broadband), but do not have the historical tax base to draw from, with new residents increasing demand immediately but paying for services over time. 
  • Rural school boards have observed an influx of new families and an increase in enrollment. As a result, there are stresses to accommodate the new growth and pending closures are being reconsidered

A detailed summary of the workshop can be found here. 

Should local communities wait to see if these trends will be short-lived before contemplating responses?  In the absence of certainty, preparing for a sustained period of robust population growth may be prudent. Pre-pandemic factors supporting stronger population growth, such as urban retirees and younger households relocating to rural areas to enjoy more affordable housing are likely to persist into the post pandemic period. In addition, the acceptance of telework as a viable alternative work arrangement may well last beyond the pandemic facilitating rural living and signaling the potential for significant rural economic development opportunities and pressures.