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Where Could a Median-Income Household Afford Real Estate in Canada?

Housing affordability has long been a hot-button issue across Canada and will take centre stage in the upcoming October Federal Election as a top priority for voters. However, given the vast geographical size of the nation, and its many market nuances, buyers’ ability to purchase a home varies widely depending on local prices and incomes; in fact, the Canadian Real Estate Association has noted a growing gap between price growth in eastern and western Canada, with improved affordability concentrated in the Prairie markets, as well as parts of the Maritimes.

8 of 15 Markets Could Be Considered Affordable

Just how feasible would it be for a household on a median income to purchase real estate in Canada? According to a new study by Zoocasa of 15 major urban centres across the country, such a household would be able to afford the local benchmark-priced home in their region in a total of eight markets, and would be able to save up the required down payment in less than a decade. However, in the remaining seven, a median-income earner wouldn’t qualify for a mortgage large enough to fund their home purchase, and would need to supplement it with a hefty down payment, which, in some urban centres, would require a savings timeline that spans decades, assuming they set aside 20% of their total income each year.

To determine the extent of affordability for median-income households, Zoocasa calculated the maximum mortgage they’d qualify for in each region, assuming a 3% interest rate, 25-year amortization, and that the equivalent of 1% of the total home purchase price would be put toward annual property taxes. An additional $100 per month for heating costs was also factored into the calculation.

Cities Where Median-Income Households Can Best Afford a Home

Similar to CREA’s observations, Zoocasa’s calculations reveal housing affordability is most prevalent in the Prairies, accounting for five of the most affordable markets. In these locales, home buyers with a median income would qualify for a large enough mortgage to purchase the average or benchmark-priced home, so long as they have the required minimum down payment of 5%.

Alternatively, a median income wouldn’t get far in the British Columbia and Ontario real estate markets. In Greater Vancouver, where the benchmark home price costs $993,300, a median-income household earning $72,662 would qualify for a mortgage of only $241,994, leaving a shortfall of $751,306 – a total of 76% of the total purchase price. That would take a household setting aside 20% of their income annually a total of 52 years to save the required funds. Fraser Valley and the Greater Toronto real estate markets round out the steepest three, requiring median-income households to come up with 70% and 63% of total purchase prices of $823,300 and $802,400, respectively – requiring prospective buyers save for 42 and 32 years.


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