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House prices in British Columbia have consistently been higher than in any other Canadian province. But the current housing extravaganza is dramatically widening the gap between home prices and incomes in a number of markets across Canada, the data shows. That ratio came down a couple of notches following the implementation of provincial and federal measures aimed at cooling the housing market between the second half of 2016 and 2018. But amid the pandemic real estate frenzy, it has been growing again, the numbers show. The average home price isn’t a perfect measure of what homebuyers are facing in the real world, as the metric can be swayed by variations in types of homes sold in a given period. Still, the numbers provide a stark picture of how rapidly affordability is eroding.
Canada's index score in the first quarter of 2022 amounted to 150.5, which means that house price growth has outpaced income growth by almost 51 percent since 2015. Along with Vancouver, Toronto is one of the largest real estate markets in Canada. The average price for a home in Toronto was $1,136,280, making it the second most expensive city in the country. Toronto is Canada's largest city and draws a lot of domestic and international attention, thus commanding high prices for real estate. We will also include a figure for average household income as a way to see how affordability stacks up across provinces. The greater the ratio between the average home and the average household income, the less affordable the housing market is.
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The problem with a national average is it doesn't take into account the large variation between specific markets in Canada or the price difference between different property types. West Virginia boasts the country's lowest housing costs and its highest rates of homeownership. However, the state also consistently ranks among the worst states to live. The number of housing units sold is also set to rise over the three year period.
The average price for a detached home according to the Winnipeg Regional Real Estate Board was $364,817 in September 2021. Cities such as Airdrie, Red Deer, and Lethbridge are near enough to Calgary while managing to be much more affordable. For example, the average home in Airdrie costs $395,300, over $60,000 cheaper than Calgary proper. The Canadian Real Estate Association compiles monthly statistics on activity over Multiple Listing Service® Systems of Canadian Real Estate Boards and Associations.
Average house prices in Canada from 2014 to 2020 with a forecast up to 2022 with, by province
The median price of a Montreal-area condo, meanwhile, could drop by 1.5%, to $421,383. Looking at Ontario, the average Ontario home price fell to $835,090 in October 2022, a small drop of 0.1% month-over-month that continues Ontario’s decline in home prices. This means that Ontario home prices have dropped on a monthly basis for seven months in a row, with prices now significantly below what they were last year. Vancouver is the most populous city in British Columbia and is also infamously expensive for housing.
The price for a house in Ontario in 2022 is forecasted to be approximately 942,300 Canadian dollars. “And that’s going to be very problematic for people who bought at the top … and never see those home prices go back up again,” he says. The risk of a housing bust is higher in some of the smaller communities that have seen steep price appreciation, Moffatt says. But even stress-tested homeowners might feel the pinch from higher borrowing costs, Petramala says. And not all recent homebuyers had to go through the stress test, which isn’t mandatory for all lenders, Petramala notes. And for recent homebuyers, the question is what happens as interest rates rise from record lows.
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In the pandemic-linked housing boom, average residential property values have become decoupled from average incomes over vast swathes of the country. The homeownership rate is also among the highest in the nation, at 74.8%. However, Mississippi also has the nation's highest poverty rate, with a fifth of its inhabitants living below the poverty line.
This reversal made CMHC insurance more accessible, making it easier for borrowers to qualify for a CMHC-insured mortgage. At the same time, an increase to the mortgage stress test benchmark rate effective June 1, 2021, has made it harder to qualify for a mortgage. As fixed-mortgage rates rise above 4.00%, pushing the mortgage stress test well above 5.25%, prospective homebuyers will start to see a decrease in their mortgage affordability. Rate hikes by the Bank of Canada and rising bond yields will push up the cost of borrowing as mortgage rates continue to rise.
Over recent times, the economy of Canada has been slowly growing and stabilizing leading to the strengthening of its currency. Consequently, people moving to Canada with what were traditionally stronger currencies will have less money after changing the money. Contrary to other countries where house prices have been falling or remaining relatively stagnant, Canada’s house rates have been steadily growing alongside its economy.
To use individual functions (e.g., mark statistics as favourites, set statistic alerts) please log in with your personal account. In Newfoundland and Labrador, the benchmark home price in September 2021 was $321,700. The average income in Newfoundland and Labrador is around $55,500, meaning the benchmark price of a home is about 5.7x the average income. There are many other cities in the province if you are looking for something cheaper than Toronto. The largest of these cities would include Ottawa and Hamilton who had prices of $629,112 and $876,000 respectively.
Likely, home prices will flatten out for possibly several years, allowing incomes to gradually make up some of the ground lost. The dizzying pace of home price growth in the past several months is “quite unusual and it’s certainly unsustainable in the long run,” says Guatieri. “Households are more sensitive than they ever have been in the past to even small increases in interest rates,” Petramala says. Now, though, prices have risen so much they’ve eroded the affordability gains from extra-cheap borrowing, she adds. The benchmark home price, at $441,900, was more than six per cent higher than last year’s levels, although property values remain below their 2014 highs, the Calgary Real Estate Board said.
The forecast shows that prices are set to rise over the three year period. Much like home prices tend to be on the rise, the price of rent is also rising in many Canadian cities. The most expensive Candian cities to rent in are Vancouver and Toronto, where rent for a one-bedroom apartment averages $1,850 and $2,230, respectively. In 2019, residential real estate transactions in Canada reached 486,800, a 6.2% increase from a five-year low recorded in 2018.
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