Tracking Canadian Housing Market Affordability (1999 to 2023)

https://themeasureofaplan.com/canadian-housing-affordability/

2 4 3 years ago

This digs into historical trends in the Canadian housing market using data on home prices, household incomes, and mortgage rates to paint a picture of housing affordability across the country.

A few insights:

Across most cities in Canada, real estate prices peaked in Spring 2022, spurred on by a home buying spree during the pandemic. Since then, home prices have tumbled in most major cities in Canada.

The most severe home price declines have been in Hamilton and Toronto, with current home prices roughly 20% lower than the all-time high price.

On the other hand, home prices in Calgary / Regina / Saskatoon remain at or near the all-time high.

As of January 2023, the average home price in Canada has fallen by 15% (current price of $714,700 versus all-time high price of $841,400).

In spite of the recent declines in home prices in many cities across Canada, the housing market still remains unaffordable for most potential new homebuyers.

As of January 2023, a homebuyer who purchases the average home in Canada with a 20% downpayment at current mortgage rates would have a monthly mortgage payment of $3,611 per month ($43,332 per year). Compared to the median pre-tax household income of $89,709 in Canada, this means that the mortgage payment represents 48.3% of income.

discretion22• 3 years ago

monthly mortgage payment of $3,611 per month ($43,332 per year). Compared to the median pre-tax household income of $89,709 in Canada, this means that the mortgage payment represents 48.3% of income.

As the payroll taxes deduct (roughly) 30% from the $90K salary, leaving around $60K, that actually turns into about 70% of actual take-home salary. That makes it seriously difficult for anyone to then pay the roughly $5K in property taxes and utilities (in Toronto) plus electric and gas of approximately $250/month (if they want light and heat in the house). Things like food then become luxury, occasional, items.

I'm surprised the market correction has not been much more than it has. Something has to give and I don't see Canadian companies giving huge salary increases anytime soon (they massively underpay compared with the US).

getToTheChopin2• 3 years ago

Yep great points. The average citizen simply can't buy the average home in most cities.

nimzoLarsen• 3 years ago

70% of pre-tax household income going towards mortgage payments in Toronto / Vancouver.

That is simply ludicrous —- those markets are looking at a future where blue collar and service workers will need to live outside the city boundaries and commute in to serve food, clean, etc.

Tracking Canadian Housing Market Affordability (1999 to 2023)

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