Canada Housing Market

In recent years, the squeeze on affordability has become increasingly evident, with everything from daily groceries to housing costs witnessing significant upticks. This trend necessitates higher earnings for families to maintain a basic standard of living. Among these, housing stands out as one of the heftiest expenses, although the cost of various other goods and services has also surged notably. This raises the question: what effect does this have on the real estate sector?

To understand the changing dynamics between living expenses and real estate prices, Zoocasa conducted an analysis involving 15 Canadian cities. This analysis compared the current market basket measure (MBM) and benchmark home prices with their values five years prior. The MBM data, indicating the disposable income a family of four needs for a basic standard of living, was sourced from Statistics Canada’s latest 2022 figures. Meanwhile, January 2024 benchmark home prices were obtained from the Canadian Real Estate Association (CREA).

Home Prices Soar Beyond Living Costs in Most Cities Despite the general rise in living costs, it’s interesting to note that in 13 out of the 15 cities examined, the increase in home prices has exceeded the rise in the MBM. For instance, Calgary reported the highest MBM at $55,771, contrasting with Quebec CMA’s lowest at $45,411.

Over a five-year span, Moncton’s MBM saw an 18.4% increase, whereas its home prices more than doubled, marking a 100% increase from 2019 to 2024. Halifax’s scenario was similar, with an 18.5% rise in the MBM against an 82.4% increase in home prices.

According to Zoocasa’s CEO, Carrie Lysenko, “The disparity between the cost of living and the pace at which home prices are escalating poses a significant challenge for Canadians seeking affordable housing. A strategic shift in the property market is essential to narrow the gap between income levels and housing expenses.”

Among other cities, Winnipeg and Saint John also witnessed MBM increases above 18% within five years. However, given their lower MBMs compared to Toronto and Vancouver, and with home prices under $340,000, they remain among the more affordable options.

Interestingly, while Toronto and Vancouver have higher MBMs, the rate of home price increases in these cities has been relatively moderate. This modest growth does little to enhance affordability due to the already high cost baseline in these areas.

Spotlight on Canada’s Most Affordable Housing Markets St. John’s demonstrates the smallest shift in living costs, with a 15.2% increase in the MBM over five years. Its home price growth remained modest, suggesting a lesser impact of declining affordability on its residents.

Regina and Saskatoon recorded a 16.1% MBM change from 2017 to 2022, with minimal fluctuations in benchmark home prices. Regina, in particular, saw the least change in home prices, suggesting a market that has managed to keep housing costs relatively stable amidst rising living expenses.

Edmonton stands out as another city where home price growth (9.1% from 2019 to 2024) has not outpaced the increase in the MBM, presenting potential opportunities for homebuyers seeking value in a market that’s becoming increasingly hard to navigate.

Lysenko emphasizes, “In cities witnessing a climb in living costs, the relatively steady home prices offer a silver lining for prospective buyers. This highlights the importance of looking beyond major urban centers and detached homes for affordable housing solutions in today’s market.”

Source: Cost of Living Climbs: Here’s How Home Prices Stack Up to Living Costs | Zoocasa Blog