Housing Affordability in Ontario – Bigger Picture First
RE/MAX Canada’s 2022 Housing Affordability Report (based on a Leger survey commissioned by RE/MAX Canada), reveals that 68% of Canadians are willing to make at least one sacrifice to buy a home they can afford. The most common compromise is relocation, a trend that continues to top as a primary influence on the local housing markets across the country.
“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.
- Canadians love their neighbourhoods, but will move to achieve housing affordability
- 64% of Canadians say relocation is one of the top sacrifices they would make for this
- 50% said the farthest they would go would be less than 100 kilometers
- 38% would make the sacrifice of moving to a different city/province/region regardless of distance
- 38% 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
- 56% indicated they would be willing to sacrifice the type of home they purchased
- 29% of survey respondents identified purchasing a home under co-ownership with family and friends as an option
- 27% said renting a part of their home for additional income could be considered
What is keeping some away from the Canadian Housing Market?
- For 43% it is the high price of real estate in their area (this is up 1% from last year)
- For 35% it is the higher cost of living
- For 24% it is a shortfall in salary (down 2% from 2021)
- For 24% it is the rising interest rates (up 6% from 2021)
Housing Affordability Across Canada
Based on the average residential selling prices, Brandon in Manitoba ranked as the most affordable market in 2022, replacing Winnipeg. This is followed by Regina in Saskatoon, St. John’s in Newfoundland, Moncton in New Brunswick and Red Deer in Alberta.
Based on the share of income spent on mortgage payments, Red Deer in Alberta 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 (26.94%) and Brandon (27.73%) in Western Canada.
Eastern Canada’s most affordable regions to buy and carry a mortgage include Thunder Bay in Ontario (29.78% of monthly income spent on mortgage), followed by St. John’s (31.45%) and Moncton (33.4%)
By comparison, if you look at the chart below, 100.97% of the monthly income (median after tax income) is being spent on mortgage in GTA markets.
The average monthly mortgage amount across Canada ranges from approximately $1,492 to $6,314. Depending on regional income levels and with a 20% down payment, this accounts for anywhere from 25.86 to 112.25% of Canadians’ monthly income.
According to the survey, 18% of Canadians define housing affordability as allocating only 30 to 40 % of their monthly household income toward housing costs, including mortgage payments, property taxes and other housing-related expenses.
“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.
Read the latest monthly TRREB Market Watch reports to view average home and condo prices across the GTA.
Check out the latest home and condo for sale listings in Mississauga, Milton, Brampton, Burlington, Oakville, Ancaster, Hamilton.
Housing Affordability in Ontario
Similar to Western Canada and Atlantic Canada, some of the smaller regions outside of Toronto and the GTA have experienced some of the highest year-over-year price increases in the first half of 2022, due to a rise in demand and limited supply.
Windsor: +24.42% from $542,225 in 2021 to $674,637 in 2022
Barrie: +24.40% from $767,004 in 2021 to $954,133 in 2022
Sudbury: +23.85% from $402,855 in 2021 to $498,939 in 2022
London: +23.26% from $632,302 in 2021 to $779,383 in 2022
Hamilton: +22.35% from $775,742 in 2021 to $949,099 in 2022
Thunder Bay: T+17.58% from $315,321 in 2021 to $370,761 in 2022
Kingston: +20.83% from $574,844 in 2021 to $694,576 in 2022
Ottawa: +11.46% from $728,205 in 2021 to $811,653 in 2022
Kitchener/Waterloo: +4.29% from $759,115 in 2021 to $791,674 in 2022
Toronto/GTA: +16.88% from $1,075,636 in 2021 to $1,257,257 in 2022.
Some of the most significant factors impacting housing affordability in Ontario among others, include low or diminishing housing supply, rising interest rates, cost of living and inflation, out-of-province or out-of-region buyers, economic and employment conditions. Alternatives to traditional home ownership have also been on the rise in some Ontario regions. Given all of this, find out what your home buying options in 2022 look like.
The most affordable neighbourhoods across Ontario regions surveyed include:
GTA – Oshawa, Orangeville and Essa
Hamilton – Crown Point North, Durand North and Central South
Kingston – Kingscourt, Henderson and Rideau Heights
Thunder Bay – Westfort, Current River and East End
London – London East, St. Thomas and South London
Ottawa – Rockland, Herongate/South Keys and Bells Corners
Sudbury – Onaping Falls, Capreol and Wahnapite
Interest Rate Effect on Housing Affordability in Canada
The record-low interest rates in 2020 and 2021 presented a great 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.
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.”
Concern over the ability to afford a home remains strong among Canadians
- 68% 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% say that eroding housing affordability is making them less confident in their ability to purchase a home
- 63% express that rising interest rates are prompting them to put their home-buying plans on hold for the foreseeable future
- 70% of Canadians agree that Canada needs a national housing strategy to solve the housing crisis. This number is up 10% from last year
Elton Ash, Executive Vice President, RE/MAX Canada says, “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.”
Source Credit: remax.ca