Buying a house in Canada isn’t for the faint of heart or wallet. Home prices have risen steadily over the past decade, reaching a national average of $698,520 as of March 2024. That’s a 75% increase in comparison with January 2014 and represents a whopping dollar difference of $398,119, in line with the Canadian Real Estate Association (CREA). On average, how much money do Canadians should earn to afford a house?
Still, affordability conditions should not more likely to improve any time soon the optimism that mortgage rates will stabilize; A monthly study Research conducted by Ratehub.ca shows that affording a house has turn into increasingly difficult because the start of the 12 months. (Ratehub and MoneyDown are each owned by Ratehub Inc.) The study measures affordability by calculating the minimum annual income required to buy a house at a mean price in 13 of Canada’s major real estate markets, based on real estate data in addition to average Mortgages and mortgage stress test rates. It measures trends in affordability on a monthly basis as rates of interest and property prices fluctuate.
The March 2024 calculations are based on a mean Fixed-rate mortgage with a five-year term A rate of 5.62% and a resulting stress test of seven.62% show that home affordability declined in 12 of the 13 markets surveyed (Halifax was the exception), largely because of rising home prices.
“While mortgage rates remained relatively flat month-on-month, house prices increased, leading to a deterioration in affordability,” says James Laird, co-CEO of Ratehub.ca and president of mortgage lender CanWise.
Let’s take a have a look at what this implies for Canadian home buyers in these regions.
The most cost-effective shopping options in Canada
Halifax, Regina and Fredericton are at the highest of the list.
Halifax: The only market where property prices fell
Halifax was the one price outlier in March and recorded the one month-on-month price decline. The average home price in Atlantic Canada’s largest urban market was $529,600, down $1,600 from February. Consequently, a house buyer would should have an annual income of $111,250 to qualify for a mortgage; $315 lower than last month. While Halifax stays a decent seller’s market, homebuyers there proceed to face challenges from rising costs of living and rates of interest that will limit the variety of sales of higher-priced single-family homes.
Regina: Affordability stays, but prices are rising rapidly
The average home price within the City of Regina saw a modest increase of $2,500 in March, reaching $313,100. That means Regina-based home buyers will need an income of $71,850 to qualify for the required mortgage, a rise of $410.
While the Prairie markets proceed to have among the lowest home prices in Canada, data shows conditions are rapidly worsening. According to the Saskatchewan Realtors AssociationYear-to-date sales are 10% higher than last 12 months, with the biggest concentration of buyers within the Regina-Moose Mountain, Saskatoon-Biggar and Swift Current-Moose Jaw economic regions. This is the ninth month in a row with above-average sales, the actual estate authority notes. Meanwhile, the provision of newly listed homes fell 15% year-on-year, with total inventory 40% below the 10-year trend – the right recipe for heating prices.
Fredericton: Real estate prices are more likely to rise because of rate of interest cuts
Fredericton is the third and final city where the extra income required to buy a house stays below $1,000. The average house price there rose by $2,600 a month to $292,900, raising the minimum income by $430 to $68,170. According to CREA, home sales in Fredericton fell 15.2% for the month.
This reflects real estate trends New Brunswick overall, as property prices have risen steadily over the past three months. This is essentially because of shrinking supply, as latest registrations remain 12.1% below the five-year average in March. However, sales and provide could pick up if rate of interest cuts occur later this summer.
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The Least Affordable Places to Shop in Canada
Toronto, Hamilton and Vancouver are at the underside of the list.
Toronto: The hardest place to purchase a house in March
It should come as no surprise that homebuyers in Toronto are under probably the most financial pressure. Property prices there rose sharply over the pandemic lockdown years and remained elevated at a mean of $1,113,600 in March, up $19,700 from February. This resulted in the common buyer needing an annual income that was $3,400 higher than in February, bringing it to $217,500.
While home sales slowed barely in the beginning of the 12 months, the Toronto Regional Real Estate Board (TRREB) says there continues to be enough competition out there to drive up prices, and that it will only get more intense as rates of interest begin to fall.
Hamilton: Another difficult Golden Horseshoe market
The city of Hamilton – which has surged in popularity as an actual estate destination lately – ranked second in worsening affordability. The average home price stays under the $1 million mark, making it a much cheaper option in comparison with neighboring Toronto. But that gap is narrowing sharply, rising by $14,600 in March to a mean of $850,500. As for income, a Hamilton buyer must earn $169,640 annually, a rise of $2,540.
Vancouver: Declining sales, but demand continues to drive prices
The city of Vancouver stays Canada’s most costly housing market with a median price of $1,196,800 in March, up $13,500 from the previous month. As a result, a buyer there must earn $232,620 to qualify for the required mortgage, a rise of $2,270 in comparison with February.
Similar to Toronto, home sales in Vancouver fell barely in the primary few months of the 12 months as supply increased. However, this was not enough to offset market demand, which was the driving force behind the value increase.
Housing affordability in Canada’s major cities
Check out the table below to see how affordability modified in Canada’s major real estate markets between February and March, based on home price and the income required to acquire a mortgage.
February/March 2024: How much do you’ve gotten to earn to purchase a house in Canada?
| City | Average house price February. | Average house price March. | price change | Income for February | Income for March. | Change in income |
| Calgary | $567,900 | $580,400 | $12,500 | $118,300 | $120,480 | $2,180 |
| Edmonton | $375,300 | $385,900 | $10,600 | $83,220 | $85,100 | $1,880 |
| Halifax | $531,200 | $529,600 | -$1,600 | $111,600 | $111,250 | -$350 |
| Hamilton | $835,900 | $850,500 | $14,600 | $167,100 | $169,640 | $2,540 |
| Montreal | $519,100 | $531,300 | $12,200 | $109,400 | $111,550 | $2,150 |
| Ottawa | $628,500 | $636,700 | $8,200 | $129,320 | $130,730 | $1,410 |
| Regina | $310,600 | $313,100 | $2,500 | $71,440 | $71,850 | $410 |
| Fredericton | $290,300 | $292,900 | $2,600 | $67,740 | $68,170 | $430 |
| Saint John | $328,800 | $335,000 | $6,200 | $74,750 | $75,830 | $1,080 |
| Toronto | $1,093,900 | $1,113,600 | $19,700 | $214,100 | $217,500 | $3,400 |
| Vancouver | $1,183,300 | $1,196,800 | $13,500 | $230,350 | $232,620 | $2,270 |
| Victoria | $848,000 | $861,000 | $13,000 | $169,300 | $171,550 | $2,250 |
| Winnipeg | $345,400 | $353,600 | $8,200 | $77,770 | $79,210 | $1,440 |
Methodology: The data within the table is predicated on a mortgage with a 20% down payment, a 25 12 months amortization, an annual property tax of $4,000 and monthly heating of $150. Mortgage rates are the common of five-year fixed rates of interest from the Big Five banks in March 2024 and February 2024. Average home prices come from the CREA MLS Home Price Index (HPI).
How much mortgage are you able to afford? How much house are you able to buy?
While this study examines regional affordability based on average home prices and mortgage rates, Canadian mortgage borrowers can calculate how much of a mortgage they qualify for based on their income, debt ratio and other living expenses. A practical tool, the MoneyDown affordability calculatorcalculates the numbers for you based in your specific financial situation and site.
It can also be essential to keep in mind that today’s rate of interest environment is kind of volatile. While analysts increasingly expect the Bank of Canada to chop its benchmark federal funds rate below 5% this summer, there isn’t a guarantee when the speed cut will actually occur. This with variable mortgage rates They can expect their borrowing costs to stay stable for the foreseeable future and that rates of interest will slowly decline as rate of interest cuts occur.
Bond market yields (utilized by lenders to cost their fixed-rate mortgage rates) are currently extremely reactive, rising and falling in keeping with latest economic data. Recently, stronger-than-expected inflation reports from Canada and the US have pushed five-year bond yields to five.7%, which is able to put upward pressure on rates of interest.
Given that these plan changes can have a big impact in your monthly payments, today’s plan buyers should approach the market with an informed strategy. Of course you’re employed with a Mortgage brokerHaving access to the complete tariff picture in Canada is all the time a sensible idea.
Read more about Mortgage affordability:
- Where are you able to buy real estate in Canada?
- The Complete Guide for First-Time Home Buyers in Canada
- Tools to calculate your mortgage payments and costs in Canada
- Mortgage Refinance Calculator
This article was created by a MoneyDown content partner.
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