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 per cent of markets are expected to regain balance, and more than one-quarter (28 per cent) 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 per cent 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 per cent 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 per cent
- 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 per cent
- 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 per cent
- 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 per cent
- 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 per cent
- 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 per cent
- 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 per cent
- 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 per cent
- 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 per cent
- 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 per cent
Average home prices based on local real estate association boards
Average monthly income based on Statistics Canada
Monthly mortgage payment based on six per cent 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 per cent of its income to carry a mortgage on the typical home; this is up 1.7 per cent from the previous quarter. By comparison, during the 1990s housing bubble, the figure was 57 per cent.
Affordability erosion was concentrated in the usual places, such as Vancouver (106.3 per cent), Toronto (84.8 per cent), and Victoria (80.2 per cent). 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 per cent. Or, as another example, mortgage payments in Vancouver declined 8.9 percentage points to 95.7 per cent.
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 per cent), Edmonton (32.2 per cent), and Quebec (32.7 per cent).
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