5 Best Cities to Live in Canada to Ride Out a Recession

Recent analysis from Haver Analytics put the probability of America going into a recession in 2023 at 99.3%. That’s pretty high, and given Canada’s close ties with its southern neighbour, chances are we will also need to adjust to an economic slowdown at some point this year.

For home buyers, this means taking a good, honest look at whether or not it makes sense to buy in these uncertain times. Even if you can afford to purchase a home, can the place you call home — the community, neighbourhood and city you reside — withstand an economic slowdown?

Obviously, no one can predict the future. But taking an honest look at whether or not your city can withstand a recession will go a long way in helping home buyers decide if now is the right time to invest in real estate.

Using America As An Example

Finding a city that can withstand an economic downturn is crucial during a recession. Some cities are far more resilient than others. Some cities are better equipped to weather the storm. Some cities have strong job markets, a more diverse economy and a stable housing market — all factors that contribute to how well a city and its residents are able to ride out a recession.

Take, for instance, how certain American cities weathered the recession after the 2007-08 US housing market crash. Two cities in Texas — Austin and Houston — felt the pain of the Great Recession of 2008, but both cities were able to bounce back relatively quickly due to their strong job markets and diverse economies.

In contrast, cities like Detroit, MI and Cleveland, OH struggled to recover from the 2008 recession due partly to the lack of economic diversity (they relied on the automobile industry), which led to job insecurity and housing instability.

Economic Factors to Consider

Don’t get me wrong; it’s not an easy process to assess whether or not a city is in a good position to ride out a recession. Numerous and complex factors influence the economic potential of each city and region. To simplify this complex dynamic, let’s focus on six key economic factors that are crucial in determining a region’s economic health:

1. The unemployment rate
2. Housing affordability
3. Industry diversity
4. The cost of living
5. Government support, and
6. Demographic data

1. The Unemployment Rate

The unemployment rate is a key indicator of a city’s economic health since it measures the percentage of the labour force that is not currently employed (but is actively seeking employment).

Keep in mind just because a city has a high unemployment rate doesn’t mean the city’s economy is struggling. You need to dig a bit deeper to find out if a high percentage of individuals are in training or education programs.

Also, it’s important to assess the type of jobs available to residents of that region. What education and skill level are required to obtain and perform these jobs? If there is a low unemployment rate along with a high number of low-skill jobs, this doesn’t mean a city is economically healthy; on the flip side, if a city has a higher unemployment rate, but a higher percentage of high-skilled jobs, then it may actually be in a better position to withstand an economic downturn.

2. Housing Affordability

Housing affordability is another important economic factor to consider. High housing costs can make it difficult for individuals and families to live in a region, which can lead to a lack of skilled workers and a stagnant economy.

When analyzing a region’s housing affordability, it is important to consider both rental and homeownership costs. For instance, how accessible are affordable housing options for both renters and potential homeowners? Are there options for subsidized housing and rental caps, and are there programs in place to help first-time buyers become property owners?

3. Industry Diversity

Industry diversity refers to the variety of industries that exist within a region. A region with diverse industries is more likely to be economically stable than a region that relies heavily on one industry.

When analyzing a region’s industry diversity, it is important to consider both the number and size of those industries. A region with a large number of small industries may not be as economically stable as a region with a smaller number of large industries.

4. Cost of Living

The cost of living refers to the amount of money required to maintain a certain standard of living in a region, including housing, food, transportation, and healthcare expenses.

When analyzing a region’s cost of living, it is important to consider both the overall cost and the specific costs of different expenses.

For example, a region with a high cost of housing but a low cost of healthcare may be more affordable for individuals with chronic medical conditions.

5. Government Support

Government support refers to the policies and programs in place to support a region’s economy. This can include tax incentives for businesses, infrastructure investments, and job training programs.

When analyzing a region’s government support, it is important to consider both the quantity and quality of the support. For example, a region with a large number of tax incentives but a lack of job training programs may not be as economically healthy as a region with a smaller number of tax incentives but a robust job training program.

6. Demographic Data

Demographic data refers to information about the population of a region, such as age, ethnicity, and income. This data can be used to identify potential economic opportunities and challenges.

When analyzing a region’s demographic data, it is important to consider both the overall trends and the specific subgroups within the population. For example, a region with a high overall income may still have pockets of poverty and economic inequality.

Other Factors to Consider

While employment and housing prices are critical to the feasibility of city residents withstanding an economic downturn, there are still plenty of factors to consider beyond the economic considerations.

Looking beyond the cost of living and job opportunities are the almost-intangible quality of life factors, such as access to healthcare, education opportunities, crime rates, and environmental factors.

Quality of life

1. Access to parks and green spaces

Access to parks and green spaces has been shown to have a positive impact on both physical and mental health. According to a study published in the Journal of Environmental Science and Technology, people living in areas with more green space have lower stress levels and are less likely to suffer from depression and anxiety. In addition, access to parks and green spaces provides opportunities for outdoor recreation and exercise, which can improve overall physical health.

2. Cultural amenities

Cultural amenities, such as museums, theatres, and art galleries, can enhance a person’s quality of life by providing intellectual and cultural enrichment opportunities.

According to a study published in the Journal of Cultural Economics, cities with a higher concentration of cultural amenities tend to have higher economic growth and greater development opportunities.

3. Entertainment options

Entertainment options, such as restaurants, bars, and music venues, can also contribute to the quality of life by providing opportunities for socialization and leisure activities. According to a study published in the Journal of Travel Research, cities with a higher concentration of entertainment options tend to attract more tourists and have higher levels of economic growth.

Access to healthcare

1. Availability of doctors and hospitals

Access to healthcare is an important consideration when choosing a place to live. The availability of doctors and hospitals can impact a person’s ability to receive quality medical care in a timely fashion.

According to a study published in the Journal of Health Services Research and Policy, cities with a higher concentration of doctors and hospitals tend to have better health outcomes and lower mortality rates.

2. Health insurance coverage

Health insurance coverage is also an important consideration when choosing a place to live.

According to a study published in the Journal of Health Economics, cities with higher health insurance coverage rates tend to have better health outcomes and lower mortality rates.

Education opportunities

1. Quality of schools

The quality of schools in an area can have a long-lasting impact on whether or not residents receive a quality education. Better education means better future job prospects.

According to a study published in the Journal of Urban Economics, communities with higher-quality schools tend to have higher economic growth and development levels.

2. Availability of post-secondary institutions

The availability of post-secondary institutions, such as colleges and universities, can also impact the educational opportunities and future prospects of city residents.

According to a study published in the Journal of Higher Education, cities with a higher concentration of post-secondary institutions tend to have higher levels of economic growth and development.

Crime rates

1. Overall crime rate

Crime rates are an important consideration when choosing a place to live. Areas with higher crime rates can impact a person’s safety and sense of security.

According to a study published in the Journal of Criminal Justice, neighbourhoods with higher crime rates tend to have lower levels of economic growth and development.

2. Property crime rate

Property crimes, such as burglary and theft, also impact city residents’ safety and sense of security.

According to a study published in the Journal of Quantitative Criminology, regions with higher property crime rates tend to have lower economic growth and fewer development opportunities.

Environmental factors

1. Air quality

Air quality is an important environmental factor to consider when choosing a place to live. Poor air quality can have negative impacts on one’s health, including respiratory problems and cardiovascular disease.

According to a study published in the Journal of Environmental Health Perspectives, regions with higher levels of air pollution tend to have higher mortality and morbidity rates.

2. Water quality

Water quality is also an important environmental factor to consider when choosing a place to live. Poor water quality can have negative impacts on one’s health, including gastrointestinal illness and other diseases.

According to a study published in the Journal of Environmental Health, areas with higher levels of water pollution tend to have higher morbidity and mortality rates.

3. Natural disasters

Natural disasters, such as hurricanes, floods, and wildfires, can also impact the safety and well-being of community residents.

According to a study published in the Journal of Risk Research, areas with higher levels of exposure to natural disasters tend to have lower levels of economic growth and development. It is important to consider the risk of natural disasters when choosing a place to live and to take appropriate precautions to mitigate the risks.

5 Best Cities to Ride Out a Recession in Canada

Going into 2023, there is still a great deal of uncertainty within the Canadian and global economies. As a result, many Canadians may wonder which cities are best equipped to weather a recession. Based on factors such as job market strength, industry diversity, affordable housing options, government support, and labour force participation rates, here are the top five cities in Canada to ride out a recession:

#1. Toronto, Ontario

Toronto is a top choice for those looking to ride out a recession. Despite complaints from the rest of Canada (that Torontonians think they are the centre of the universe), the reality is this city boasts a strong job market and diverse economy.

According to a report by BMO Capital Markets, Toronto has added over 80,000 jobs in the past year, with growth in industries such as finance, technology, and healthcare. While Toronto doesn’t offer the most affordable housing options — the average home price sits at $870,559 — it isn’t Canada’s most expensive housing market (or even the most expensive in North America). Plus, when compared to other major North American cities, the cost of living in Toronto is stable and relatively cheap.

In addition, the city also boasts a high labour force participation rate, with 66.1% of the population actively participating in the workforce.

As for governmental support, Toronto is exceptionally fortunate, with municipal, provincial and federal governments all going to bat for this major urban centre. For instance, during the pandemic, the federal government implemented several measures to support businesses and individuals, such as the Canada Emergency Wage Subsidy and the Canada Emergency Response Benefit. While this aid was not isolated to just Toronto residents, it certainly helped a large segment of the city’s population (and this, in turn, helped local businesses).

#2. Ottawa, Ontario

Known for its stable government jobs, Ottawa is a great option for those seeking job security during a recession. In addition to government jobs, Ottawa’s tech industry is also growing rapidly, with over 1,700 tech companies currently operating in the city. This industry growth has led to an increase in job opportunities and economic stability.

Unlike Toronto, Ottawa offers affordable housing options, with the average home price sitting at $498,000. The city also benefits from a high labour force participation rate, with 65.4% of the population actively participating in the workforce.

Ottawa also benefitted from three levels of government support, both during the pandemic, as well as during harder economic times, like during a recession.

#3. Vancouver, British Columbia

Vancouver is a great option for those looking to ride out a recession due to its strong job market and growing tech industry.

According to a report by BMO Capital Markets, Vancouver has added more than 30,000 jobs in the past year, with growth in industries such as technology, healthcare, and construction.

Despite a diverse economy and strong job prospects, the one reason why Vancouver doesn’t top the list is due to its notoriously expensive housing market. The average home price sits at $1.084 million — a staggering sum for any first-time home buyer.

Still, Vancouver’s high labour force participation rate — 65.2% of the population actively participating in the workforce — and the city’s mild climate make it an attractive option for those looking to escape harsh Canadian winters while riding out a recession.

#4. Calgary, Alberta

Calgary is a top choice for those looking to ride out a recession due to its strong energy industry and affordable housing options.

According to a report by BMO Capital Markets, Calgary has added over 10,000 jobs in the past year, with growth in industries such as energy, construction, and healthcare.

Additionally, Calgary offers affordable housing options, with the average home price sitting at $420,000.

While Calgary’s unemployment rate is higher than other cities on this list, the city still benefits from a high labour force participation rate, with 66.8% of the population actively participating in the workforce.

#5. Halifax, Nova Scotia

Halifax is a great option for those looking to ride out a recession due to its growing tech industry and low cost of living.

According to a report by BMO Capital Markets, Halifax added over 5,000 jobs in the past year, with growth in industries such as technology, healthcare, and construction.

Halifax also offers very affordable housing options, with the average home price at $320,000.

Add to this the city’s high labour force participation rate, with 63.5% of the population actively participating in the workforce, and government support for businesses and residents and this East Coast city is an ideal spot to put down roots and live out the recessionary economic slowdown.

Honourable Mentions

Not to be outdone, here are four more ‘honourable mentions’ — Canadian cities that also offer great advantages for Canadians choosing to ride out a recession in Canada:

1. Quebec City, Quebec
2. St. John’s, Newfoundland and Labrador
3. Regina, Saskatchewan
4. Victoria, British Columbia

All four of these cities demonstrated their resilience during previous recessions, plus each city has a diverse range of industries that can provide stability during economic downturns.

Bottom Line

While no city is completely recession-proof, these five Canadian cities offer strong job markets, industry diversity, the potential for affordable housing options (relative to earnings), government support, and high labour force participation rates. All of these factors, plus the intangibles such as access to medical care and cultural activities, make these five Canadian cities great options for those looking to buy a home and ride out a recession.

Please keep in mind that riding out a recession requires careful consideration of both economic and non-economic factors. By doing your research and managing your finances effectively, you can increase your chances of successfully weathering a recession.