Canada Housing Market

Owning a home is a dream for many Canadians. However, it may seem like an unattainable goal for most, especially with the current real estate market conditions. According to the latest data from online comparison platform Ratehub.ca, the income required to purchase a home in Canada’s major cities has spiked in almost all markets. In this article, we’ll look at Ratehub.ca’s report and provide you with some insights into the current housing market.

The Report:

In January 2023, Ratehub.ca released a report using data from the Canadian Real Estate Association (CREA), which revealed that, compared to the previous year, the income required to purchase a home has increased in almost all major markets. This increase in income requirement comes despite the fact that housing prices have softened substantially in nearly every Canadian market.

According to the report, the stress test rate is currently around 7.37%, which is over 2% higher than a year ago. The increase in rates has made homes less affordable in nine out of 10 of the cities studied by Ratehub.ca, with Victoria and Vancouver showing the most significant spikes in income requirements, with increases of $25,500 and $23,350 respectively. Calgary ranks third, with an increase of $20,310.

Toronto, a city known for its chronic affordability challenges, ranks seventh, with required income edging up only $7,620. The one exception in the bunch is Hamilton, where the income requirement is $4,350 less due to plunging home prices in the city.

Although the report paints a gloomy picture, it also highlights some bright spots. Recent stabilization among both fixed and variable mortgage rates has slightly improved the affordability dial, with the required income declining in every market except Halifax.

Income needed to buy an average home across 10 Canadian cities

Vancouver – $212,800

Calgary – $105,680

Halifax – $102,260

Montreal – $103,560

Edmonton – $79,370

Ottawa- $122,440

Toronto – $207,000

Winnipeg – $72,500

Hamilton – $159,100

Conclusion

The housing market in Canada is becoming increasingly unaffordable, making it harder for people to own their dream home. According to Ratehub.ca’s report, the income required to purchase a home in major cities has increased significantly in the past year, despite softening housing prices. However, with recent stabilization among both fixed and variable mortgage rates, buyers’ affordability has improved slightly. It remains to be seen how the housing market will evolve in the coming years, but one thing is for sure, prospective homebuyers will need to have a solid financial plan in place to achieve their dream of homeownership.

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