One in three Canadians considering “workarounds” to buy a home amidst declining housing affordability in Canada, supply shortages
- Of those Canadians who are considering alternative ways to become homeowners, 54% are Millennials and Gen Z
- 15% of Canadians reported they were able to grow their savings during the pandemic and plan to use these funds as a down payment on a home in the next six to 12 months
- Winnipeg and Regina continue to be two of the more affordable markets in Canada year-over-year, with an average selling price below $350,000
- St. John’s tops the list of most affordable cities in 2021, with an average selling price at $307,619
- 45% of Canadians agree that a national housing strategy would improve their ability to own a home
In a new report exploring housing affordability in Canada in 2021, RE/MAX found that one in three (33%) Canadian homebuyers is exploring alternative options to help them get a foot into the housing market. These include renting out a portion of a primary residence (21%), pooling finances with friends or family to purchase a home (13%) and living with like-minded neighbours in a co-op/shared living arrangement (7%).
According to a Leger survey commissioned by RE/MAX, 42% of Canadians said the high price of real estate was a barrier to entry into the market. This is up just 4% over last year – surprising, given the consistent price growth experienced by housing markets from coast to coast over the past year. Among prospective homebuyers, millennials and Gen Z are most likely to consider alternative regions and communities, and/or financing options to keep affordability in play.
“It’s promising to see Canadian buyers deploying their ingenuity to be able to buy a home, but we must address the urgency of the underlying housing affordability crisis in Canada, which is predominantly systemic,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “While we wait for a nationally and municipally supported housing strategy based on an aggressive goal to boost our national inventory of affordable housing, there are regions across the country, especially in Western Canada, that remain accessible to first-time buyers looking to break into the market.”
Key barriers impacting personal housing affordability in Canada, according to consumers:
- a shortfall in salary (26%)
- the fear of rising interest rates (18%)
- the fear of being “house poor” (18%)
- lack of steady full-time employment (16%)
- current levels of household debt (11%)
- the mortgage stress test (11%)
Housing Affordability Index
RE/MAX Canada analyzed house price to income ratio by city in Canada. Here’s how they ranked.
Regional Housing Affordability in Canada
Canada’s two largest cities, Toronto and Vancouver, have struggled with significant housing affordability challenges, mainly due to low supply and high demand spurred on by low interest rates. Unsurprisingly, both cities have remained at the bottom of the list year-over-year when it comes to housing affordability in Canada. At the other end of the spectrum, St. John’s, NL has replaced Regina, SK as the most affordable Canadian city to buy a home in 2021.
TORONTO, has seen many first-time homebuyers in 2021 flock to single-detached homes, but condominiums remain the most affordable choice. Typically, buyers in Toronto are willing to push their budgets modestly to attain the home they desire. When it comes to factors that are influencing affordability in the region, low/declining housing supply, returning immigration numbers, and tightened lending rules are the most significant factors.
A popular trend in 2021 has been an influx of buyers moving to smaller towns outside of the city, including but not limited to Stratford, London and York Region neighbourhoods, because of the more affordable housing options found there. Some of the least affordable neighbourhoods in Toronto are High Park, The Junction and Bloor West.
Some alternatives to individual home ownership that have become relevant in Toronto since the start of 2021 include choosing to rent instead of buying, and using a portion of a newly purchased principal residence as an income property, to supplement the mortgage payments.
It is not expected that Toronto will see a cooling of house prices in the fall and winter of 2021, because of ongoing regional demand, continued limited supply, and the expectation that buyers will return to the city.
Most Affordable Neighbourhoods to Buy a Home
hort of exploring alternative solutions to find and achieve housing affordability in Canada, those who are willing to expand their boundaries can still find “hidden gem” neighbourhoods with homes at below-average prices. In a wider survey, RE/MAX Canada brokers and agents were asked to identify the most affordable neighbourhoods in the communities they serve. From approximately 300 survey submissions received between June 16 – 30,2021, some of the most affordable neighbourhoods topping the list include:
- Washington Park, Regina, Saskatchewan
- New Waterford, Cape Breton, Nova Scotia
- West Flat, Prince Albert, Saskatchewan
- Bayview, Sault Ste. Marie, Ontario
- Portage La Prairie, Central Plains, Manitoba
Meanwhile, in what are traditionally considered Canada’s most expensive cities to buy a home, this same survey also identified “relatively affordable” neighbourhoods where homes can be purchased at prices below the city-wide average. Some of these neighbourhoods include:
- New Westminster in Greater Vancouver, BC
- Penbrooke, Rundle and Dover in Calgary, Alberta
- Regent Park in Toronto, Ontario
- North End Hamilton, Ontario
- Hawthorne, Carlton Place and Vanier in Ottawa, Ontario
Additional Report Highlights
In an analysis of housing affordability in Canada, the RE/MAX 2021 Housing Affordability Report finds that:
- John’s, Regina, Winnipeg, Edmonton, Ottawa, Calgary and Windsor rank as the top affordable regions (see index), based on average sale price, monthly household income, and percentage allocated towards a mortgage
- Those who have been able to afford homeownership (56% of Canadians) are significantly more likely to be aged 35+ (64%), live in a rural (70%) or suburban (60%) area, and earn $80k+ per year (74%).
- Of those who are not able to afford home ownership (41% of Canadians), they are significantly more likely to be aged 18-34 (60%), live in an urban area (48%), and make less than $40k per year (70%).
- When it comes to finding ways to own a home, Gen Z and Millennials claim that:
- 54% would consider buying a home in a different neighbourhood or region, just to be able to enter the housing market.
- 53% are only able to own a home with the help of their parents or other family members.
- 20% claim that owning a home has meant that they’ve had to move to another city within their province given affordability challenges.
- 17% have moved or purchased a home in entirely new provinces because it was more affordable than their previous place of residence.
- Canadians in Western Canada are more likely to want to get creative in their home-buying efforts (39%), as compared to Ontario and Atlantic Canadians (33%).