Residential Logo

Housing Affordability in Canada: 2022 RE/MAX Report

2022-07-21T12:25:28-04:00July 20th, 2022|
  • Housing affordability in Canada

Relocation, relocation, relocation: Canadians love their neighbourhoods, but will move to achieve housing affordability

  • For 64 per cent of Canadians, relocation is among the top sacrifice they’d be willing to make in order to achieve housing affordability; however, half (50 per cent) agree that the farthest they would go would be less than 100 kilometres
    • 56 per cent say that moving to a different neighbourhood/community would be one of the top three sacrifices they would make
    • 38 per cent would make the sacrifice of moving to a different city/province/region regardless of distance
  • 38 per cent of Canadians define housing affordability as a home they can afford that meets their basic needs, and includes some liveability elements, such as green spaces and restaurants
  • Based on average residential selling price, Brandon, MB ranked as the most affordable market in 2022, replacing Winnipeg which was most affordable in RE/MAX Canada’s 2021 ranking. This is followed by Regina, SK (which remained on the list year-over-year), St. John’s, NL, Moncton, NB and Red Deer, AB
  • Based on the share of income spent on mortgage payments, Red Deer, AB ranked as Canada’s most affordable housing market, with 25.86% of average monthly income spent on the average-priced home. This is followed by Regina, SK (26.94%) and Brandon, MB (27.73%) in Western Canada. Eastern Canada’s most affordable regions to buy a carry a mortgage include Thunder Bay, ON (29.78% of monthly income spent on mortgage), followed by St. John’s, NL (31.45%) and Moncton, NB (33.4%)

Toronto, ON and Kelowna, BC (July 20, 2022) — RE/MAX® Canada’s 2022 Housing Affordability Report reveals that 68 per cent of Canadians are willing to make at least one sacrifice to buy a home they can afford, according to a Leger survey commissioned by RE/MAX Canada. The most common concession is relocation, as identified by 64 per cent of survey respondents – a trend that continues to reign as a primary influence in local housing markets across the country, say RE/MAX brokers. This is followed by 56 per cent indicating they would be willing to sacrifice the type of home they purchased; purchasing a home under co-ownership with family and friends, as identified by 29 per cent of survey respondents; and renting a part of their home for additional income, at 27 per cent.

According to the same Leger survey, 43 per cent of Canadians said the high price of real estate in their area was a barrier to entry into the market. This is up one per cent from last year. Other hurdles include a higher cost of living (35 per cent); a shortfall in salary (24 per cent, down two per cent from 2021); market volatility (24 per cent); and rising interest rates (24 per cent, up six per cent from 2021).

“Despite affordability challenges across the cost-of-living spectrum, Canadians are still eager to engage in the housing market – even if it means making some sacrifices in the short-term to achieve affordable home ownership,” says Christopher Alexander, President, RE/MAX Canada.

RE/MAX Canada asked Canadians to define what “housing affordability” means to them – 38 per cent of survey respondents defined affordable housing as “a home they can afford and meets their basic needs, and includes some of the liveability elements they like such as proximity to school; or walkable neighbourhoods,” to name a few.

“While we wait for governments to implement a national housing strategy to boost Canada’s supply of affordable housing, in the short-term the market is starting to cool and balance itself out, bringing some much-needed relief from the sky-high prices that we experienced during much of the pandemic. This trend is largely being driven by higher interest rates,” says Alexander.

view & download the 2022 Housing Affordability Index

Housing Affordability in Canada: Regional Market Trends

RE/MAX Canada brokers and agents in 24 key markets across the country were asked to provide their analysis on local market activity and housing affordability trends for the first half of 2022.

Housing Affordability in Western Canada

Across Western Canada, competition from out-of-town or move-over buyers has put upward pressure on home prices year-over-year. Double-digit year-over-year price increases were noted in Kelowna/Central Okanagan, BC (+21.1% from $778,657 in 2021 to $942,977 in 2022), Vancouver, BC (+19.69% from $1,097,000 in 2021 to $1,313,000 in 2022), Victoria, BC (+14.93% from $885,117 in 2021 to $1,017,292 in 2022), and Winnipeg, MB (+12.66% from $388,291 in 2021 to $437,460 in 2022). Meanwhile, more modest price increases were seen in markets including Calgary, AB (+5.85% from $499,229 in 2021 to $528,440 in 2022), Edmonton, AB (+4.73% from $390,490 in 2021 to $408,961 in 2022), Red Deer, AB (+3.24 % from $345,576 in 2021 to $356,779 in 2022), Regina, SK (+0.42% from $322,600 in 2021 to $323,950 in 2022), Brandon, MB (+1.75% from $304,929 in 2021 to $310,252 in 2022) and Saskatoon, SK (+1.45 from $368,079 in 2021 to $373,410 in 2022).

In regions such as Victoria, BC, and Vancouver, BC, some of the most significant factors impacting housing affordability include the high cost of living, inflation, and the housing supply shortage, which is being further compounded by new-home construction delays. Some of these factors reign true as well in regions such as Edmonton, AB, where affordability challenges are being attributed to residential construction delays; out-of-province/out-of-region buyers driving up demand and prices; and rising interest rates. In Calgary, the primary factor has been rising interest rates.

As buyers navigate high housing prices, some regions across Western Canada are experiencing trends such as properties being purchased as a primary residence while also renting part of the home to supplement monthly mortgage payments. The pooling of finances between friends and family has continued to remain a trend, as noted by the local RE/MAX broker in Victoria, BC.

The most affordable neighbourhoods across Western Canada regions surveyed include:

  • Victoria, BC – Sooke, Saanich West and View Royal
  • Kelowna/Central Okanagan, BC – Rutland, Glenrosa and Kelowna North
  • Edmonton, AB – Beverly/Beacon Heights, Prince Rupert/Queen Mary Park and Westwood
  • Calgary, AB – Dover, Erinwoods and Abbeydale
  • Red Deer, AB – Vanier Woods, Sunnybrook South and Laredo
  • Winnipeg, MB – Transcona, North Kildonan and Riverbend
  • Brandon, MB – Souris, Wawanesa and Rivers
  • Saskatoon, SK – Riversdale, King George and Casewell Hill

Housing Affordability in Ontario

Similar to Western Canada and Atlantic Canada, some of the smaller regions outside of Toronto/GTA have experienced some of the highest year-over-year price increases in the first half of 2022, due to rising demand and limited supply – Windsor, ON (+24.42% from $542,225 in 2021 to $674,637 in 2022), Barrie, ON (+24.40% from $767,004 in 2021 to $954,133 in 2022), Sudbury, ON (+23.85% from $402,855 in 2021 to $498,939 in 2022 ), London, ON (+23.26% from $632,302 in 2021 to $779,383 in 2022), Hamilton, ON (+22.35% from $775,742 in 2021 to $949,099 in 2022), Thunder Bay, ON (+17.58% from $315,321 in 2021 to $370,761 in 2022), Kingston, ON (+20.83% from $574,844 in 2021 to $694,576 in 2022), Ottawa, ON (+11.46% from $728,205 in 2021 to $811,653 in 2022). In Kitchener/Waterloo, ON, the increase was more modest at +4.29% year-over-year from $759,115 in 2021 to $791,674 in 2022. Unsurprisingly in Toronto/GTA, year-over-year price increases sit at +16.88% from $1,075,636 in 2021 to $1,257,257 in 2022.

Alternatives to traditional home ownership have also seen an uptick in some Ontario regions, as identified by RE/MAX brokers in Hamilton and Windsor. Some of the most significant factors impacting housing affordability in Ontario, highlighted by brokers in Windsor, Sudbury and Ottawa among others, include low or diminishing housing supply, rising interest rates, cost of living and inflation, out-of-province/out-of-region buyers, economic and employment conditions.

The most affordable neighbourhoods across Ontario regions surveyed include:

  • GTA, ON – Oshawa, Orangeville and Essa
  • Hamilton, ON – Crown Point North, Durand North and Central South
  • Kingston, ON – Kingscourt, Henderson and Rideau Heights
  • Thunder Bay, ON – Westfort, Current River and East End
  • London, ON – London East, St. Thomas and South London
  • Ottawa, ON – Rockland, Herongate/South Keys and Bells Corners
  • Sudbury, ON – Onaping Falls, Capreol and Wahnapite

Housing Affordability in Atlantic Canada

In Atlantic Canada, Halifax has experienced significant year-over-year price growth (+23.59% from $460,787 in 2021 to $569,475 in 2022) as a result of the move-over buyers migrating to the region for its relative affordability. More modest price increases were experienced in St. John’s, NL (+6.23% from $313,364 in 2021 to $332,900 in 2022), Moncton, NB (+2.11 % from $331,003 in 2021 to $337,992 in 2022) and Charlottetown, PEI (+29.30% from $355,000 in 2021 to $459,000 in 2022).

Affordability in regions across Atlantic Canada, such as Halifax, St. John’s and Charlottetown, has been impacted most by rising interest rates and inflation, low housing supply, out-of-province/out-of-region buyers, the return of immigration, and insufficient new-home construction further impacting growing demand.

The most affordable neighbourhoods across Atlantic Canada regions surveyed include:

  • Halifax, NS – Lower Sackville, Eastern Passage and Fairview
  • St. John’s, NL – Paradise, Conception Bay South and Portugal Cove St. Philips
  • Charlottetown, P.E.I – Summerside, Rural and Cornwall
  • Moncton, NB – Moncton Centre, Moncton East and Riverview West

Interest Rate Effect on Housing Affordability in Canada

The record-low interest rates that first appeared in 2020 and continued throughout 2021 presented an exceptional opportunity for Canadians to enter or move up in the housing market. However, they also added fuel to an already hot market. With inflation at a 40-year high and interest rates rising, the housing market is starting to cool. In late 2021, RE/MAX Canada had anticipated steady price growth for the year ahead, with an estimated 9.2-per-cent increase in average residential sale prices across the country for 2022. Currently, with the exception of Hamilton, Ontario, price growth appears to be easing ­– a trend that is expected to continue through the remainder of 2022, with growth likely to occur in the single digits, and some markets expected to experience a modest decline.

“Despite current economic conditions, rising interest rates are not the biggest factor impacting housing affordability,” says Benjamin Tal, Deputy Chief Economist, CIBC. “Instead, it’s the pace at which interest rates increase that poses a greater risk to the housing market and economy in the short-term. In the long-run, factors such as rising immigration levels putting further strain on demand, limited housing supply, supply chain hold-ups, and the shortage of skilled labourers will be the greatest hurdles in overcoming Canada’s housing affordability crisis. These must all be addressed in order to help balance supply.”

Adds Elton Ash, Executive Vice President, RE/MAX Canada, “The shifts we are seeing in the housing market, with prices starting to ease across the country in tandem with softening demand and sales, are an overdue adjustment. A healthy housing market is characterized by price appreciation in the mid- to high-single digits, and many markets across Canada are re-entering that comfort zone.”

Based on broker insights and external data, as indicated within the accompanying RE/MAX Canada Housing Affordability Index, the average monthly mortgage amount across Canada ranges from approximately $1,492 to $6,314. Depending on regional income levels and with a 20-per-cent down payment, this accounts for anywhere from 25.86 to 112.25 per cent of Canadians’ monthly income. According to the Leger survey, 18 per cent of Canadians define housing affordability as allocating only 30 to 40 per cent of their monthly household income toward housing costs, including mortgage payments, property taxes and other housing-related expenses.

Thus, concern over the ability to afford a home remains among Canadians, with 68 per cent of survey respondents agree that they can’t afford to buy a home in the neighbourhood/region they choose in the next six months; 64 per cent say that eroding housing affordability is making them less confident in their ability to purchase a home; and 63 per cent express that rising interest rates are prompting them to put their home-buying plans on hold for the foreseeable future. Unsurprisingly, 70 per cent of Canadians agree that Canada needs a national housing strategy to solve the housing crisis. This number is up 10 per cent from last year.

About the 2022 RE/MAX Canada Housing Affordability Report: The 2022 RE/MAX Canada Housing Affordability Report includes data and insights from RE/MAX brokerages. RE/MAX brokers and agents are surveyed on market activity and local developments. Average sale price is reflective of all property types in a region and varies depending on the region. Regional summaries with additional broker insights can be found at RE/MAX.ca.
About Leger: Leger is the largest Canadian-owned full-service market research firm. An online survey of 1,529 Canadians was completed between June 24-26, 2022, using Leger’s online panel. Leger’s online panel has approximately 400,000 members nationally and has a retention rate of 90 per cent. A probability sample of the same size would yield a margin of error of +/- 2.5 per cent, 19 times out of 20.
About the RE/MAX Network: As one of the leading global real estate franchisors, RE/MAX, LLC is a subsidiary of RE/MAX Holdings (NYSE: RMAX) with more than 140,000 agents in almost 9,000 offices with a presence in more than 110 countries and territories. RE/MAX Canada refers to RE/MAX of Western Canada (1998), LLC and RE/MAX Ontario-Atlantic Canada, Inc., and RE/MAX Promotions, Inc., each of which are affiliates of RE/MAX, LLC. Nobody in the world sells more real estate than RE/MAX, as measured by residential transaction sides.
RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. RE/MAX agents have lived, worked and served in their local communities for decades, raising millions of dollars every year for Children’s Miracle Network Hospitals® and other charities. To learn more about RE/MAX, to search home listings or find an agent in your community, please visit remax.ca. For the latest news from RE/MAX Canada, please visit blog.remax.ca.
Forward looking statements: This report includes “forward-looking statements” within the meaning of the “safe harbour” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “believe,” “intend,” “expect,” “estimate,” “plan,” “outlook,” “project,” and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding housing market conditions and the Company’s results of operations, performance and growth. Forward-looking statements should not be read as guarantees of future performance or results. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include (1) the global COVID-19 pandemic, which has impacted the Company and continues to pose significant and widespread risks to the Company’s business, the Company’s ability to successfully close the anticipated reacquisition and to integrate the reacquired regions into its business, (3) changes in the real estate market or interest rates and availability of financing, (4) changes in business and economic activity in general, (5) the Company’s ability to attract and retain quality franchisees, (6) the Company’s franchisees’ ability to recruit and retain real estate agents and mortgage loan originators, (7) changes in laws and regulations, (8) the Company’s ability to enhance, market, and protect the RE/MAX and Motto Mortgage brands, (9) the Company’s ability to implement its technology initiatives, and (10) fluctuations in foreign currency exchange rates, and those risks and uncertainties described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company’s website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.

ARCHIVES

One in three Canadians considering “workarounds” to buy a home amidst declining housing affordability in Canada, supply shortages

  • Of those Canadians who are considering alternative ways to become homeowners, 54% are Millennials and Gen Z
  • 15% of Canadians reported they were able to grow their savings during the pandemic and plan to use these funds as a down payment on a home in the next six to 12 months
  • Winnipeg and Regina continue to be two of the more affordable markets in Canada year-over-year, with an average selling price below $350,000
  • St. John’s tops the list of most affordable cities in 2021, with an average selling price at $307,619
  • 45% of Canadians agree that a national housing strategy would improve their ability to own a home

Mississauga, ON and Kelowna, BC (July 20, 2021) — In a new report exploring housing affordability in Canada in 2021, RE/MAX found that one in three (33%) Canadian homebuyers is exploring alternative options to help them get a foot into the housing market. These include renting out a portion of a primary residence (21%), pooling finances with friends or family to purchase a home (13%) and living with like-minded neighbours in a co-op/shared living arrangement (7%).

According to a Leger survey commissioned by RE/MAX, 42% of Canadians said the high price of real estate was a barrier to entry into the market. This is up just 4% over last year – surprising, given the consistent price growth experienced by housing markets from coast to coast over the past year. Among prospective homebuyers, millennials and Gen Z are most likely to consider alternative regions and communities, and/or financing options to keep affordability in play.

“It’s promising to see Canadian buyers deploying their ingenuity to be able to buy a home, but we must address the urgency of the underlying housing affordability crisis in Canada, which is predominantly systemic,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “While we wait for a nationally and municipally supported housing strategy based on an aggressive goal to boost our national inventory of affordable housing, there are regions across the country, especially in Western Canada, that remain accessible to first-time buyers looking to break into the market.”

Key barriers impacting personal housing affordability in Canada, according to consumers:

  • a shortfall in salary (26%)
  • the fear of rising interest rates (18%)
  • the fear of being “house poor” (18%)
  • lack of steady full-time employment (16%)
  • current levels of household debt (11%)
  • the mortgage stress test (11%)

Housing Affordability Index

RE/MAX Canada analyzed house price to income ratio by city in Canada. Here’s how they ranked.

Housing Affordability in Canada_2021 data table

Regional Housing Affordability in Canada

Canada’s two largest cities, Toronto and Vancouver, have struggled with significant housing affordability challenges, mainly due to low supply and high demand spurred on by low interest rates. Unsurprisingly, both cities have remained at the bottom of the list year-over-year when it comes to housing affordability in Canada. At the other end of the spectrum, St. John’s, NL has replaced Regina, SK as the most affordable Canadian city to buy a home in 2021.

VANCOUVER remains unchanged as Canada’s least affordable city year-over-year. The most popular type of property for first-time homebuyers in 2021 has been condominiums, which hasn’t shifted. Typically, buyers in Vancouver are willing to push their budgets modestly to attain the home they desire.

When it comes to factors that are influencing affordability in the region, the following are most likely to improve affordability: changing interest rates; economic/employment conditions; and business re-openings. On the flip side, tightened mortgage lending rules; returning immigration numbers; out-of-province/out-of-region buyers; and low or diminishing housing supply are believed to negatively impact affordability in the area.

The three most affordable neighbourhoods in Vancouver are East Hasting, Downtown (Vancouver East and Renfrew) and Collingwood. The three least affordable neighbourhoods in Vancouver are Shaughnessy, UBC and Point Grey.

Some alternatives to individual home ownership that have become relevant in Vancouver since the start of 2021, are pooling finances with friends or family to purchase a property, purchasing a property that is lived in by the owner while also being partially rented to supplement monthly payments, otherwise known as an income property, and choosing to rent instead of buying. Vancouver was seeing constant multiple offer scenarios and over asking prices until recently. It is not expected that Vancouver will see the cooling off of house prices in the fall and winter of 2021 due to ongoing regional demand.

When compared to Vancouver’s high-priced market, Calgary and Edmonton have both seen an influx of new and prospective buyers influenced by the lower priced housing options offered, as well as appealing liveability factors, such as green spaces and proximity to employment. Low commercial rental rates have also helped to diversify the employment sectors in areas like manufacturing and technology.

CALGARY ‘s most popular type of property for first-time homebuyers in 2021 has been single-detached homes, which has not shifted year-over-year. Typically, buyers in Calgary are willing to push their budgets modestly to attain the home they desire.

When it comes to factors that are influencing affordability in the region, changing interest rates and employment/economic conditions and likely to have a positive impact. On the flip side, tightened lending rules, low or diminishing housing supply, continued interest in larger homes putting pressure on supply; and demand from out-of-province/out-of-region buyers are believed to negatively impact affordability in the area.

The three most affordable neighbourhoods in Calgary are North East Calgary, South East Calgary, and regionally in the province of Alberta, Airdrie, Cochrore and Strathmore. The least affordable neighbourhoods in Calgary are Britannia, Bel-Aire and Upper Mount Royal.

An alternative to individual home ownership that has become relevant in Calgary since the start of 2021 is using portion of a principal residence as an income property, to supplement monthly mortgage payments and offset bills.

Calgary is a lot more affordable when compared to other major cities in Canada, and it has been in a prolonged weak economy since 2015 which affects the housing market. Some pockets of Calgary are still seeing multiple-offer scenarios, but the trend is price- and location-specific. Overall, Calgary has seen a slowdown in activity and price increases recently. Prices are already cooling this summer, which is normal and is expected to continue due to tighter mortgage regulations. Current average sale prices range from $266,868 to $588,541, depending on the property type.

EDMONTON first-time homebuyers have been gravitating toward both single-detached and semi-detached homes in 2021. This has shifted from last year, with the increased desire to own a home with a backyard. Another high-demand trend this year is the desire for new homes, as the idea of being the first one to live in it is appealing to buyers. Typically, buyers in Edmonton stay within their budgets when purchasing a home.

When it comes to factors that are influencing affordability in Edmonton, interest rates, high rental rates, economic/employment conditions, increased housing supply and legal basement suites would have a positive impact on regional affordability. On the flip side, an increase in housing prices, and the stress test are believed to negatively impact affordability in the area.

The most affordable area of Edmonton is Central North, where a two-bedroom bungalow with full basement (approximately 900 sq. ft.) would sell for between $160,000 and $190,000. The most expensive area of Edmonton varies on location. Edmonton’s Majestic North Saskatchewan River Valley View properties, as an example, are priced anywhere from $1,500,000 to $5,000,000.

An alternative to individual home ownership that has become relevant in Edmonton since the start of 2021 has been renting out a portion of a principal residence to supplement monthly mortgage payments. In the last three months, Edmonton has seen more multiple-offer scenarios, which is concerning more buyers. A unique trend this year in the Edmonton housing market has been people living within a five- to 10-minute distance of their place of work, for convenience. It is not expected that Edmonton will see the cooling of house prices in the fall and winter of 2021 because of ongoing regional demand.

TORONTO, has seen many first-time homebuyers in 2021 flock to single-detached homes, but condominiums remain the most affordable choice. Typically, buyers in Toronto are willing to push their budgets modestly to attain the home they desire. When it comes to factors that are influencing affordability in the region, low/declining housing supply, returning immigration numbers, and tightened lending rules are the most significant factors.

A popular trend in 2021 has been an influx of buyers moving to smaller towns outside of the city, including but not limited to Stratford, London and York Region neighbourhoods, because of the more affordable housing options found there. Some of the least affordable neighbourhoods in Toronto are High Park, The Junction and Bloor West.

Some alternatives to individual home ownership that have become relevant in Toronto since the start of 2021 include choosing to rent instead of buying, and using a portion of a newly purchased principal residence as an income property, to supplement the mortgage payments.

It is not expected that Toronto will see a cooling of house prices in the fall and winter of 2021, because of ongoing regional demand, continued limited supply, and the expectation that buyers will return to the city.

OTTAWA continues to be a good option for those seeking housing affordability in Ontario – particularly first-time homebuyers­­­, despite the 20% uptick in prices from 2020 to 2021.

Ottawa condos have become the most popular type of property among first-time homebuyers in 2021, which has shifted from pre-pandemic, when the most popular home type among first-timers was freehold townhomes. However, given the price increase, buyers are now gravitating toward the condo market, with two-bedroom units being in higher demand. Typically, buyers in Ottawa are willing to push their budgets modestly to attain the home they desire.

When it comes to factors that are influencing affordability in the region, most likely to improve affordability are economic/employment conditions; continued interest in larger homes; business re-openings; and returning regional interest given the increase in recreational activity opportunities. On the flip-side, returning immigration numbers; low or diminishing housing supply; out-of-province/out-of-region buyers; and tightened mortgage lending rules could negatively impact affordability in the area.

The three most affordable neighbourhoods in Ottawa include Orleans, the Downtown Core and Nepean. The least affordable neighbourhoods are Manotick, Kanata and Stittsville, which offer more luxury properties with waterfront access.

Some alternatives to individual home ownership that have become relevant in Ottawa since the start of 2021 include pooling finances with friends or family to purchase a property, and buying a property that is lived-in by the owner while also being partially rented to supplement monthly payments.

Ottawa is still considered an affordable city and current homeowners enjoyed seeing their property values grow over the past year. However, first-time homebuyers have fears that they might not be able to afford to enter the market. Most properties in Ottawa are still seeing multiple offers due to limited inventory, but compared to the beginning of the year, properties are now selling closer to the listing price. It is not expected that Ottawa will see the cooling of house prices in the fall and winter of 2021, due to continued limited supply. The entry level price for home in Ottawa begins at $300,000.

ST. JOHN’S, NL has eclipsed Regina, SK as the most affordable place to buy a home in Canada in 2021. Single-detached homes continue to be the most popular type of property among first-time homebuyers in 2021, specifically three-bedroom homes in the $300,000-$400,000 price range. This trend has not shifted year-over-year but St. John’s has seen a much higher volume of purchases of this property type in 2021. Typically, buyers in St. John’s stay within their budget when purchasing a home.

When it comes to factors that are influencing affordability in the region, continued interest in larger homes and changing interest rates should help improve affordability. On the flip side, low or diminishing housing supply; tightened mortgage lending rules; and out-of-province/out-of-region buyers are believed to negatively impact affordability in the area.

The overall average price for the St. John’s metro area has increased a little over 6.5% in 2021. While the price increase is not as big as that experienced by cities such as Toronto and Vancouver, St. John’s market has been in a steady decline since reaching a peak in 2014, so this past year has restored confidence in the local real estate market. This region saw several multiple offer scenarios in the first half of 2021 and is expected to continue into the second half of the year.

Cabins became hot commodities in St. John’s in the spring, shifting the focus of buyers looking for a weekend home in cabins to smaller homes in smaller communities for a lower price point. It is expected that St. John’s house prices should stabilize in the fall and winter of 2021 due to increased supply, possible rising interest rates, tightening of mortgage regulations, and the shift to a post-COVID-19 life and buyers putting money elsewhere.

.

Most Affordable Neighbourhoods to Buy a Home

Short of exploring alternative solutions to find and achieve housing affordability in Canada, those who are willing to expand their boundaries can still find “hidden gem” neighbourhoods with homes at below-average prices. In a wider survey, RE/MAX Canada brokers and agents were asked to identify the most affordable neighbourhoods in the communities they serve. From approximately 300 survey submissions received between June 16 – 30,2021, some of the most affordable neighbourhoods topping the list include:

  • Washington Park, Regina, Saskatchewan
  • New Waterford, Cape Breton, Nova Scotia
  • West Flat, Prince Albert, Saskatchewan
  • Bayview, Sault Ste. Marie, Ontario
  • Portage La Prairie, Central Plains, Manitoba

Meanwhile, in what are traditionally considered Canada’s most expensive cities to buy a home, this same survey also identified “relatively affordable” neighbourhoods where homes can be purchased at prices below the city-wide average. Some of these neighbourhoods include:

  • New Westminster in Greater Vancouver, BC
  • Penbrooke, Rundle and Dover in Calgary, Alberta
  • Regent Park in Toronto, Ontario
  • North End Hamilton, Ontario
  • Hawthorne, Carlton Place and Vanier in Ottawa, Ontario

Click below for the complete list:

View & download the list

.

The Interest Rate Effect

The record-low interest rates that first appeared in 2020 have been a “double-edged sword,” presenting an exceptional opportunity for Canadians to get into or move up in the housing market, but also adding fuel to an already hot sector. Yet, with inflationary pressures starting to emerge, interest rates could rise soon, putting pressure on over-leveraged homeowners and slowing consumer demand.

“We’ve seen many buyers benefiting from low interest rates, which has created a sense of urgency to get into the market,” says Benjamin Tal, Deputy Chief Economist, CIBC. “However, we must caution that low rates are subject to inevitably rise, possibly as soon as 2022. We have to focus on the impact that this will have on the housing market and those who have recently purchased at a lower rate, as a one-per-cent increase would significantly raise the monthly carrying cost of a home.”

Based on broker insights and external data, as seen within the accompanying RE/MAX Housing Affordability Index, the average monthly mortgage amount across Canada ranges from approximately $950 to $4,268, depending on regional income levels, and a 20-per-cent down payment, amounting to an average percentage of Canadians’ monthly income from 11% to upwards of 50%. This is currently consistent with the majority of Canadians (72%) who feel comfortable allocating less than 50% of their household income toward housing costs, including mortgage payments.

However, concern over declining housing affordability in Canada and specifically the ability to afford a home in the next two years due to rising prices remains, with nearly half (48%) of Canadians sharing this sentiment. This concern significantly rises for younger Canadians (aged 18 – 34), with 71% expressing concern. Unsurprisingly, over half (60%) of this group agrees that a national housing strategy would cool the market and improve affordability.

“Creative solutions to achieve affordable home ownership will only take us so far, as will ‘stop-gap’ measures such as the mortgage stress test,” says Christopher Alexander, Chief Strategy Officer and Executive Vice-President, RE/MAX of Ontario-Atlantic Canada. “Without a national and locally supported strategy to significantly increase housing supply, prices will continue to rise. It shouldn’t be the burden of the next generation of homebuyers to figure out how to ‘get around’ the supply shortage and resulting affordability crisis when there are feasible, long-term solutions within reach.”

Buyer Incentives and Future Affordability Considerations

Amidst market challenges, the continued push behind the First-Time Home Buyer Incentive (FTHBI) has provided Canadians with an effective way to access a suitable down payment. Of those who recently bought their first home, 35% took advantage of the FTHBI; however, of those who did not, 31% were unaware of the incentive.

Incentives and regulations put in place to curb or create demand, while advantageous for some, do not address some of the other challenges currently at play that are impacting housing affordability in Canada.

“The common means of solving Canada’s real estate challenges, such as the introduction of the stress test, solely addresses demand rather than finding a way to ensure there are enough homes for all Canadians. Unfortunately, we have yet to tackle the real issue behind housing affordability in Canada, which is supply. We share the RE/MAX opinion that addressing supply must be our top consideration moving forward,” say Ash and Alexander.

Additional Report Highlights

In an analysis of housing affordability in Canada, the RE/MAX 2021 Housing Affordability Report finds that:

  • St. John’s, Regina, Winnipeg, Edmonton, Ottawa, Calgary and Windsor rank as the top affordable regions (see index), based on average sale price, monthly household income, and percentage allocated towards a mortgage
  • Those who have been able to afford homeownership (56% of Canadians) are significantly more likely to be aged 35+ (64%), live in a rural (70%) or suburban (60%) area, and earn $80k+ per year (74%).
  • Of those who are not able to afford home ownership (41% of Canadians), they are significantly more likely to be aged 18-34 (60%), live in an urban area (48%), and make less than $40k per year (70%).
  • When it comes to finding ways to own a home, Gen Z and Millennials claim that:
    • 54% would consider buying a home in a different neighbourhood or region, just to be able to enter the housing market.
    • 53% are only able to own a home with the help of their parents or other family members.
    • 20% claim that owning a home has meant that they’ve had to move to another city within their province given affordability challenges.
    • 17% have moved or purchased a home in entirely new provinces because it was more affordable than their previous place of residence.
  • Canadians in Western Canada are more likely to want to get creative in their home-buying efforts (39%), as compared to Ontario and Atlantic Canadians (33%).

About the RE/MAX 2021 Housing Affordability Report

The RE/MAX 2021 Housing Affordability Report includes data and insights from RE/MAX brokerages. RE/MAX brokers and agents are surveyed on market activity and local developments. Average sale price is reflective of all property types in a region and varies depending on the region.

About Leger
Leger is the largest Canadian-owned full-service market research firm. An online survey of 1,539 Canadians was completed between June 4-6, 2021, using Leger’s online panel. Leger’s online panel has approximately 400,000 members nationally and has a retention rate of 90 per cent. A probability sample of the same size would yield a margin of error of +/- 2.51 per cent, 19 times out of 20.

75% of Regions “Undervalued”

Despite housing affordability, many buyers being priced out of the market

  • 62 per cent of brokers surveyed in major Canadian cities are seeing buyers priced out of their market; however, 75 per cent of brokers agree that their market is undervalued
  • Based on average household income rates and monthly percentage allocated to housing, Canadians can afford homes

Despite the commonly held notion that housing in Canada is unaffordable, a majority of Canada’s largest cities (75 per cent) are currently undervalued, according to the 2020 RE/MAX Housing Affordability Report.

The latest RE/MAX report examines a variety of housing affordability factors and how they impact Canadians’ ability to buy, particularly first-time buyers.

“Despite the many challenges that continue to plague Canadians when it comes to the prospect of home ownership, such as record debt loads, there is promising opportunity across the country to enter the market,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “That said, the national housing market still has challenges to overcome, especially in centres like Toronto where demand is far outstripping supply, pushing prices up considerably as a result. We need to continue to push for an increase in housing supply for buyers and renters, but we have yet to see a comprehensive national housing strategy to help facilitate this shift.”

A Leger survey conducted on behalf of RE/MAX reveals that surprisingly, only 38 per cent of Canadians claim that the high price of real estate is one of the biggest obstacles preventing them from buying a home. Also on their list was an insufficient salary level preventing them from saving for a down payment (26 per cent) and a fear of rising interest rates (17 per cent). Meanwhile, the majority of RE/MAX brokers (56 per cent) claim that low or shrinking inventory is a more common factor.

Emerging trends like co-ownership with friends and family have become common in hot markets such as Vancouver and Toronto, in order to overcome the hurdle of high housing prices. In regions such as Brampton, Edmonton and Ottawa, sharing a single-family home between two families, dividing the floors between them, or children seeking financial support from parents for down payments are becoming more common practices.

Of the regions surveyed, Winnipeg, Regina and Halifax are currently the most affordable markets, with average sales prices of $281,105, $301,473 and $319,071 respectively. Vancouver, Toronto and Mississauga are currently the least affordable regions in Canada, with average sales prices of $1,195,923, $883,520 and $760,005 respectively.

REMAX Housing Affordability Data Table

All levels of government must work together to find a solution to Canada’s inventory issue, as the market will remain elusive for many otherwise,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “In the interim, working with experienced, professional agents can provide insight into creative and effective ways to navigate the current housing landscape.

In Toronto, factors such as the OSFI mortgage stress test, listing shortages, rising prices and saving enough for a down payment are cited as preventing buyers from purchasing property. Buyers in this region are primarily looking to purchase condominiums, but as one of Canada’s least affordable housing markets, they continue to be priced out.

Despite recent price depreciation, Vancouver continues to experience affordability challenges. The mortgage stress test as well as government taxation policies are the leading factors preventing home ownership. Similar to Toronto, buyers are predominantly looking for condominiums, followed by townhomes as more affordable options.

Directly contrasting Vancouver is Regina, which is currently the most affordable city in Canada with a total average sale price of $301,473 and on average, only 12 per cent of monthly income required to carry a typical mortgage in the area. First-time buyers typically look for single-detached homes. Given the undervaluation of the market, co-ownership with friends and family has not been a typical practice. Buyers do not report being priced out of this market, which has seen Canada’s most affordable housing prices for the past seven years.

Halifax, another highly affordable region, is also currently exempt from experiencing the affordability challenges seen in other regions across Canada. In this fairly valued market, buyers do not report being priced out of the market, struggling through the mortgage stress test, or needing to implement creative tactics to enhance affordability.

REMAX 2020 Housing Affordability Report Graph

ADDITIONAL INSIGHTS FROM THE LEGER SURVEY INCLUDE:

  • Two in 10 Canadians plan to purchase a home, with four per cent planning to buy in the next year
  • Excluding mortgage, three in 10 Canadians have consumer debt, averaging about $24,000
  • One-quarter (24 per cent) of Canadians without a mortgage have enough money for a down payment
  • Nearly half of Canadians (42 per cent) believe that housing affordability across the country would improve with government intervention, such as a national housing strategy
  • Of the seven in 10 (68 per cent) of Canadians who do not currently own a home and do not feel they will be able to afford one in their desired neighbourhood, barriers include:
    • High price of real estate (38 per cent)
    • Salary is not enough to save for down payment (26 per cent)
    • Fear of rising interest rates (17 per cent)
    • Level of household debt (15 per cent)

REGIONAL HOUSING AFFORDABILITY INSIGHTS

#1 REGINA, SASKATCHEWAN

Regina real estate is currently seen as undervalued, with a total average sale price of $301,473. First-time home buyers are typically looking for single-detached homes as their property of choice. Read more…

#2 WINNIPEG, MANITOBA

Winnipeg real estate is viewed as undervalued when compared to other metropolitan cities across Canada. On the flip side, when looking at the current market and listing prices, Winnipeg is over valued as many sellers purchased their homes in a seller’s market and are just now settling into their correct price points. Read more…

#3 EDMONTON, ALBERTA

Edmonton real estate is currently regarded as undervalued. The implementation of the Federal mortgage stress test has unintended consequences in how it impacted Canadian homeowners. Read more…

#4 HALIFAX, NOVA SCOTIA
Halifax real estate is considered to be undervalued when compared to other cities in Canada. With a 2019 average sale price of $319,071, the housing market in Halifax remains stable and the economy is steady. Read more…

#5 WINDSOR, ONTARIO
Windsor real estate is currently regarded as undervalued, based on high demand and lack of housing supply, particularly in the resale home sector. This is especially the case in the single-detached and townhome segments, which are favoured by homebuyers. Read more…

#6 OTTAWA, ONTARIO
Ottawa is currently accurately valued, with a total average sale price of $441,693 in 2019. Condominiums and townhomes are the two favourite property types for first-time homebuyers, with the former typically listed at an affordable price range of $200,000 to $350,000. Read more…

#7 CALGARY, ALBERTA

Calgary is currently an undervalued market due to the prolonged recession facing the province. The total average sale price currently sits at $484,601. First time home buyers are most commonly seeking condominiums, which range on average from $140,000 to $300,000. Read more…

#8 LONDON, ONTARIO
London real estate is currently considered to be undervalued, with an average sale price of $416,644. Because of its affordable prices, first-time homebuyers are active across all property types when entering the London real estate market. Read more…

#9 OSHAWA, ONTARIO
Unlike many regions across Canada, Oshawa real estate is currently accurately valued, with the average price of homes in 2019 coming in at $509,446. First-time homebuyers typically seek townhomes, which fall in the average range of $300,000 to $400,000, and semi-detached homes with an average price of $350,000 to $450,000. Read more…

#10 HAMILTON, ONTARIO
Hamilton real estate is currently considered to be undervalued, with a 2019 average sale price of $535,843. When compared to cities that are of a similar distance from Toronto, Hamilton homes are generally set at a lower price point, with more than 50 per cent of stock found below the $600,000 threshold. Read more…

#11 KITCHENER-WATERLOO, ONTARIO
Kitchener Waterloo real estate is currently classified as undervalued, with an average sale price of $527,718. The region is attracting high-valued employers in the tech sector. This, coupled with two world-renowned universities, is credited with Kitchener-Waterloo’s continued growth, in lockstep with the job market and wages. Read more…

#12 VICTORIA, BRITISH COLUMBIA

Victoria real estate is currently regarded as overvalued due to the standard mortgage qualifications of income, down payment, and credit card ratings required with higher average sale prices, in addition to the mortgage stress test. Read more…

#13 BRAMPTON, ONTARIO
Brampton real estate is currently considered to be undervalued when compared to the rest of Peel Region and the Greater Toronto Area as a whole. The average 2019 sale price in Brampton was $726,948. The region’s high level of liveability is being credited with rising demand for homes, and in turn, rising prices. Read more…

#14 MISSISSAUGA, ONTARIO
Mississauga real estate is currently considered to be undervalued, with an average 2019 sale price of $760,005. Easy access to public transit, three major highways, and close proximity to Toronto Pearson Airport make it a well-connected and in-demand city, attracting big business and homebuyers alike. Read more…

#15 TORONTO, ONTARIO
Toronto real estate is considered to be fairly valued, but affordability remains a challenge. The average 2019 sale price was $883,520. Toronto homebuyers reported being priced out of the market, and first-time homebuyers are also facing added pressures including the mortgage stress test, saving enough for a down payment, a shortage of listings and rising condo prices. Read more…

#16 VANCOUVER, BRITISH COLUMBIA

Vancouver experienced an overvalued market towards the end of 2019 after seeing lower-than-average prices earlier in the year due to the tightened mortgage stress tests, new government policies and taxes and buyers holding to see how the latter and former would impact prices. Read more…

Lydia McNutt

Senior Public Relations & Content Manager | RE/MAX Canada

Lydia McNutt is an award-winning writer, editor and public relations professional, with a focus on all things real estate. At RE/MAX Canada, Lydia translates market data and trends into educational and entertaining content for homebuyers and sellers, while furthering the RE/MAX brand's reach, nationally and globally. Explore timely news articles, market trend reports and thought-leadership on blog.remax.ca. Lydia has been published nationally on topics ranging from real estate to architecture, design and decor, finance, business, technology, entertainment and lifestyle topics. Email Lydia at lmcnutt@remax.ca
Go to Top