Canadian housing is getting more affordable, but it’s still way out of reach for most. National Bank of Canada (NBF) released its Q2 2023 Housing Affordability Monitor (HAM) showing improvements in most markets. Despite rising financing costs, home prices fell enough to improve affordability. It was the third quarter to show affordability improvements, but it’s a long way from correcting 8 years of sharp erosion. Most of Canada’s households aren’t even close to being able to purchase a home at today’s prices.
Rising Rates Have Helped Affordability Improve For 3 Quarters
The C10 National Index, a weighted-average of the 10 most important real estate markets, shows home prices falling. The median sale price fell to $744,400 in Q2 2023, down 1.2% from the previous quarter and 8.1% lower than last year. Housing affordability improved due to home prices falling faster than financing costs increased. NBF notes it was the third consecutive quarter to show housing affordability improvements.
That was the good news. The bad news is that most households couldn’t afford to purchase a home at today’s prices. They aren’t even close, after roughly 8 years of eroding affordability.
Source: National Bank of Canada.
Most of Canada’s Households Can’t Afford To Buy A Home Today
Most of Canada’s population and jobs are concentrated in just a handful of major cities. All of them are now out of reach for households. The median home in the national index required a minimum annual household income of $175,900 to carry the mortgage in Q2 2023. NBF estimates this is more than double the median household income.
All of Canada’s Major Cities Are Out of Reach For Local Incomes
Canada’s major cities are out of reach for local incomes, and it’s hard to see a return to sanity. The minimum annual household income needed to qualify for a median home in Vancouver was $240k, nearly triple the local number according to NBF. More than double the local income was required in other key cities like Toronto ($225k/year), Hamilton ($205k/year), and Victoria ($204k/year). A small nugget of info for your knowledge bank—Hamilton was also Canada’s frothiest city in IMF research.
Canadian Households Can’t Afford Any Major Real Estate Market
The minimum income required to service the mortgage on a median home purchased today vs the median household income in each market.
Source: National Bank of Canada; Better Dwelling.
Quebec City was the only city even close to seeing home prices within range of incomes. A median home requires a minimum of $86.5k in annual income to carry the mortgage on a median home, 109% of the median income. It’s also the only city to see its affordability erode on the list, so it’s unlikely to last for long.
Canada is seeing affordability improve according to NBF, but only mildly. Home prices are deeply disconnected from incomes, and it would take a massive crash for affordability to return to pre-2015-levels.
Most households in the country can’t afford to buy a home, but there’s little to no effort to resolve the issue since, well… most households in the country already own a home. A lack of housing affordability primarily impacts younger households and immigrants. In general, both of these demographics are not expected to have the same favorable economic conditions as previous generations in Canada.
Between heavy taxes, inflation, rampant cost-of-living increases, sky-high costs for groceries, and an insanely over-priced housing market, it seems that this joke of a country has become nothing but a ponzi-scheme. Time for us young skilled professionals to leave and take our talents, and tax-dollars, elsewhere.
This is what happened when the previous Trudeau was in power. Not only are father and son financially illiterate, they are so self absorbed in creating their own legacy, they’re willing to sacrifice Canada and Canadians and our way of life…
I am working on a pet project here in Ontario, Canada, asking All of the 444 municipalities about Affordable Alternative and Environmentally Friendly Housing Options. Out of the 100 responses received so far , All I am hearing is regulations, bylaws building codes and costs, over and over and over . If you want a straw bale home , pay for an engineering report done in Ontario, Rammed earth home , same, geodesic dome home, same. If You want to save a buck by building something you can afford that suits YOUR needs . forget it. It has to look good in the neighborhood too, go out and see what the surrounding people think of it was one response. Another did not even know what a dome home was, I guess Google is too hard to use. Yup, we put people like that in positions of authority ruling over our housing fate. Ontarios bill 23 was a bit of a start, but Of Course it only benefits those deep pocketed developers and mortgage lenders. I.E. Banks. I emailed the Brandy New Federal Minister In Charge Of CMHC and addressed some of those concerns mainly because affordable housing is at critical levels…so they say and I actually give a flying fiddlers duck….The sound of Crickets was the response I got. IMHO, that is all any of us are going to hear on the issue of Housing affordability in Canada for a long long time to come. You would think that in this day and age, having a roof over your head would be deemed a human right , just like clean water and electricity should be too. There is No problem housing thousands of migrants or Victims of Natural Disasters in tent cities in some countries. Just ask the Red Cross. The G7 Armies use geodesic domes in THE MOST inhospitable places on the planet like the Arctic and Antarctic but those forms of shelter are unacceptable for you and I, cause there just aint no MONEY to be had, and gee, we think that building is pretty ugly too , so no . Personally, I think we need to go back to caves and wayyy fewer rules. I for one, want to be the arbitor of my own fate, Mortgages and bears be damned.
Hmm, how do we take money out of the equation without taking any money out of the equation and still make housing affordable says the mortgage lender and bank manager and bylaw officer and building inspector and municipal planner and mortgage insurer.
Simple says the uneducated Mover.
Remove yourselves from the equation.
YOU are the problem not the solution.
Houses are not for Canadians. They are for blackrock and alike.
Real estate investment by everyone and their dog is the problem with affordability. We don’t have enough homes for people to own multiple properties anymore.
Until rental units and air bnbs get sold off portfolios, nothing will happen.
We can’t build fast enough to hit targets to make home prices “affordable”
>NBF estimates this is more than double the median household income.
That’s right, “estimate”, because both statscan and the boc do not provide any financial data of the sorts. You have to guess and extrapolate. Meanwhile the federal reserve down south provides all of that for Americans, of course they fudged the numbers but it’s far better than what we have.
Most Canadians are poor, that’s my belief. The average income is actually well below $50k and the average household income probably $70k.