After last year’s cooldown in the Canadian real estate market, prices have been edging higher on solid demand, tight supply, and expectations regarding lower interest rates. Today, the average price for a home in one of the world’s hottest housing industries is a little bit more than $700,000. Despite widespread attention the issue has been given by all three levels of government, housing affordability continues to be challenging. While all the focus has been on prices in places like Toronto and Vancouver, many smaller markets have become expensive.
Are prospective homebuyers doomed? Not at all! According to the RE/MAX 2024 Canadian Housing Market Outlook report, 41 percent of markets are expected to regain balance, and more than one-quarter (28 percent) are anticipated to favour sellers. Put simply, there are plenty of opportunities in Canada’s real estate sector to find a home that suits your budget.
Affordable Canadian Real Estate, Defined
Before we get into the “where” of the most affordable Canadian real estate, let’s take a look at what it actually means.
Traditionally, housing affordability is defined as households spending 30 percent or less of their total income on shelter. In recent years, however, a wide range of studies have discovered that many homeowners and renters are allocating more than 30 percent of their earnings to keeping a roof over their heads.
But where are the places in Canada that offer some semblance of affordability? Using the average six-percent mortgage rate, let’s examine ten affordable housing markets in Canada.
10 Most Affordable Places to Buy Canadian Real Estate
Red Deer, Alberta
Average Home Price: $378,775
20% Down Payment: $75,755
Mortgage Amount: $303,020
Monthly Mortgage Payment: $1,938
Average Monthly Income (before taxes): $8,666
% of Monthly Income Allocated to Mortgage: 22.4 percent
Regina, Saskatchewan
Average Home Price: $319,800
20% Down Payment: $63,960
Mortgage Amount: $255,840
Monthly Mortgage Payment: $1,636
Average Monthly Income: $7,032
% of Monthly Income Allocated to Mortgage: 23.3 percent
Brandon, Manitoba:
Average Home Price: $340,000
20% Down Payment: $68,000
Mortgage Amount: $272,000
Monthly Mortgage Payment: $1,740.
Average Monthly Income: $7,034
% of Monthly Income Allocated to Mortgage: 24.7 percent
Edmonton, Alberta
Average Home Price: $431,387
20% Down Payment: $86,277
Mortgage Amount: $345,110
Monthly Mortgage Payment: $2,269
Average Monthly Income: $11,931
% of Monthly Income Allocated to Mortgage: 19 percent
Thunder Bay, Ontario
Average Home Price: $350,000
20% Down Payment: $70,000
Mortgage Amount: $280,000
Monthly Mortgage Payment: $1,791
Average Monthly Income: $7,026
% of Monthly Income Allocated to Mortgage: 25.5 percent
Saskatoon, Saskatchewan
Average Home Price: $339,800
20% Down Payment: $67,960
Mortgage Amount: $271,840
Monthly Mortgage Payment: $1,739
Average Monthly Income: $8,620
% of Monthly Income Allocated to Mortgage: 20.1 percent
St. John’s, Newfoundland
Average Home Price: $342,500
20% Down Payment: $68,500
Mortgage Amount: $274,000
Monthly Mortgage Payment: $1,753
Average Monthly Income: $8,552
% of Monthly Income Allocated to Mortgage: 20.5 percent
Moncton, New Brunswick:
Average Home Price: $305,100
20% Down Payment: $61,020
Mortgage Amount: $244,080
Monthly Mortgage Payment: $1,561
Average Monthly Income: $5,954
% of Monthly Income Allocated to Mortgage: 26.2 percent
Calgary, Alberta
Average Home Price: $603,700
20% Down Payment: $120,740
Mortgage Amount: $482,960
Monthly Mortgage Payment: $3,090
Average Monthly Income: $11,743
% of Monthly Income Allocated to Mortgage: 26.3 percent
Winnipeg, Manitoba
Average Home Price: $430,099
20% Down Payment: $86,019
Mortgage Amount: $344,080
Monthly Mortgage Payment: $2,263
Average Monthly Income: $9,015
% of Monthly Income Allocated to Mortgage: 25.1 percent
Average home prices based on local real estate association boards
Average monthly income based on Statistics Canada
Monthly mortgage payment based on six percent mortgage rates
The Good News and the Bad News About Affordable Housing
According to a recent RBC report, the Canadian housing market has never been less affordable. In the fourth quarter of 2023, a median household would need to spend 63.5 percent of its income to carry a mortgage on the typical home; this is up 1.7 percent from the previous quarter. By comparison, during the 1990s housing bubble, the figure was 57 percent.
Affordability erosion was concentrated in the usual places, such as Vancouver (106.3 percent), Toronto (84.8 percent), and Victoria (80.2 percent). But while one of Canada’s largest banks sees affordability improving, the improvement might be tepid.
“Under our base case scenario, the share of an average household income needed to cover ownership costs would only fall to mid-2022 levels by 2025,” said Robert Hogue, assistant chief economist at RBC, in the April 2024 report. “Meaningfully restoring affordability will likely take years in many of Canada’s large markets. In this context, we expect the housing market’s recovery to be slow at first, before gaining momentum as interest rate cuts accumulate.”
That said, a new by the National Bank of Canada suggests that there has been “widespread” improvement nationwide on the housing affordability front.
According to the financial institution’s Housing Affordability Monitor, housing affordability, measured by the mortgage payment as a percentage of income for the median home price, was seen in each of the ten markets in the first three months of 2024.
For instance, in Toronto, mortgage payments as a percentage of income tumbled 5.7 percentage points to 82.4 percent. Or, as another example, mortgage payments in Vancouver declined 8.9 percentage points to 95.7 percent.
The chief hurdle in the Canadian real estate market is housing stocks. The housing supply deficit reached an all-time high in the first quarter of 2024 and has been in freefall since 2021.
“As a result, price dynamics for both purchases and rents should remain skewed to the upside in the current acute housing shortage,” the report stated.
So, what were the three most affordable markets based on the bank’s data? Winnipeg (31.7 percent), Edmonton (32.2 percent), and Quebec (32.7 percent).
Courtesy RE/MAX Canada