Ontario real estate has been on a seemingly endless upswing throughout the coronavirus pandemic, leaving many homebuyers priced out of their local markets and seeking housing affordability elsewhere. Indeed, Ontario’s suburbs and rural markets have absorbed much of the spillover, attracting homebuyers with their lower price points, higher square footage and green space galore. This new-found demand has put upward pressure on prices, but that does not mean all Ontario real estate markets are out of reach for first-time buyers, families and newcomers, as immigration to Canada kicks into high gear.

The latest data from the Canadian Real Estate Association shows the average home price in Canada moderated slightly, to $665,850 in June 2022. Based on RE/MAX Canada’s new 2022 Housing Affordability Report, there are still many major housing markets across Canada that sit below this national average price, dispelling the notion that housing in Canada is totally unaffordable, despite the country having one of the hottest real estate markets in the world.

So, where can you get the biggest bank for your buck in the Ontario real estate market?

The Most Affordable Ontario Real Estate Markets

First, it is important to understand what determines an “affordable market.” Contrary to popular belief, affordability goes beyond the average home price, taking into account the level of income in relation to that average price. A recent survey conducted by Leger on behalf of RE/MAX Canada asked Canadians to define what affordable housing means to them. Thirty-eight per cent said housing affordability is a home they can afford that meets their basic needs, and includes some liveability elements, such as green spaces and restaurants. Digging a little bit deeper into the dollars and cents of affordability, 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.

In Ontario, the 2022 income estimate is $71,852.50, based on the LifeWorks 2022 Salary Projection Survey. Using this estimate, the average monthly income in 2022 is $5,987,71. With this in mind, here are three major Ontario real estate markets that offer relative affordability – with two of them falling at or below that 40-per-cent allocation that classifies housing as “affordable.”

Thunder Bay, Ontario Real Estate

  • Average Home Price (January 1 – June 30, 2022): $370,761.00
  • Average Down Payment: $74,152.20
  • Average Mortgage Amount: $296,608.80
  • Monthly Mortgage Payment: $1,783.00
  • % of Monthly Income Allocated to Mortgage: 29.78%

Average residential sale price in the Thunder Bay housing market rose 17.58 per cent from 2021 to 2022 ($315,321 to $370,761). The increase is being attributed to move-over buyers from more expensive urban areas, who have enough equity to outbid and drive up prices. Buyers are willing to push their budgets modestly higher to “win” the bid, according to Mario Tegola, local broker and owner of RE/MAX First Choice Realty.

In an anecdotal ranking on affordability in the region (1 being the most unaffordable, and 10 being the most affordable), Tegola ranked Thunder Bay ranked at 6. However, despite its mid-scale ranking, locals are still concerned about affordability factors, with cost of living and inflation topping the list, followed by the impacts of low housing supply and economic/employment conditions.

The top three most affordable neighbourhoods in Thunder Bay are Westfort, Current River and East End. In comparison, the top three least affordable neighbourhoods based on average residential sale price in the region are River Terrace, Mariday Park and Sherwood Estates.

Despite good local affordability, homebuyers have been exploring alternatives to traditional home ownership, with some choosing to rent a part of their primary residence to generate supplemental income. Others are opting to rent instead of buy in a challenging market plagued by a housing supply shortage. Currently, approximately 25 per cent of listings are experiencing multiple-offer scenarios, with 50 per cent per cent of homes selling over asking price. 

Sudbury, Ontario Real Estate

  • Average Home Price (January 1 – June 30, 2022): $498,939.00
  • Average Down Payment: $99,787.80
  • Average Mortgage Amount: $399,151.20
  • Monthly Mortgage Payment: $2,399.00
  • % of Monthly Income Allocated to Mortgage: 40%

Average residential sale price in Sudbury rose by 23.8 per cent from 2021 to 2022 ($402,855 to $498,939). Since the beginning of the year, Sudbury has been experiencing move-over buyers coming to the region from larger cities or more expensive urban areas. When asked to anecdotally rank the region on an affordability scale (with 1 being the most unaffordable, and 10 being the most affordable), local Sudbury RE/MAX broker Cathy Gregorchuk assigned the region a 7 rating, since it is still very affordable despite recent price increases.

Although Sudbury real estate is relatively affordable, the most significant factors impacting affordability in the region are low or diminishing housing supply; followed by rising interest rates and out of province/out of region buyers. There have been no improvements to affordability in the region in the last three years, the only factor of note is the first-time Home Buyers’ Plan, but it hasn’t shifted the needle, especially due to low inventory and high buyer demand.

Alternatives to traditional home ownership, such as co-ownership or the need to rent a part of the home for supplemental income have not been a factor in the area due to its relative affordability, even with rising home prices. Prospective buyers in Sudbury are most concerned about continuously rising interest rates and the relative higher prices of homes.

The top three most affordable neighbourhoods in Sudbury are Onaping Falls, Capreol and Wahnapite. In comparison, the top three least affordable neighbourhoods based on average residential sale price in the region are Lo-Ellen, Lockerby and New Sudbury.

Buyers are concerned and are in a bit of a holding pattern at the moment with uncertainty looming in the back of their minds. Currently, approximately 65 per cent of listings are experiencing multiple-offer scenarios; while 81 per cent of homes have sold over asking in the month of June alone.

Windsor, Ontario Real Estate

  • Average Home Price (January 1 – June 30, 2022): $674,637.00
  • Average Down Payment: $134,927.40
  • Average Mortgage Amount: $539,927.40
  • Monthly Mortgage Payment: $3,244.00
  • % of Monthly Income Allocated to Mortgage: 54,18%

Average residential sale price in Windsor rose by 24.42 per cent from 2021 to 2022 ($542,225 to $674,637). The trend of rising prices has been driven by move-over buyers from expensive urban markets since the beginning of the year, who have been seeking affordability in relation to their big-city origins. In an anecdotal affordability ranking, where 1 is considered very affordable and 10 is considered very unaffordable, local Windsor broker Glen Muir of RE/MAX Preferred Realty Ltd. rates Windsor a 7, due to the influx of employment opportunities coming soon, including the Mega Hospital, Battery Plant, Bridge Amazon and feeder plants.

Although Windsor is a relatively affordable region, factors continue to weigh on homebuyers, including economic/employment conditions; rising interest rates; and out-of-province/out-of-region buyers impacting demand and prices.

Since the start of the year, many first time homebuyers in Windsor have started pooling finances together with friends and family as alternatives to traditional home ownership in order to afford a home. Prospective buyers in Windsor are anticipating prices to cool but are concerned about rising interest rates and not being able to afford a home.

The top three most affordable neighbourhoods in Windsor are Westside Windsor, Downtown Windsor, and Central Windsor. In comparison, the top three least affordable neighbourhoods based on average residential sale price in the region are Lakeshore, LaSalle and South Windsor.

With home prices in the region starting to cool – a trend that is anticipated to continue into the fall, due to rising interest rates and modestly higher supply – buyers may be able to enter the market a little easier.

Currently, approximately 35 per cent of listings are experiencing multiple-offer scenarios; while approximately 70 per cent of homes are selling over asking.