Despite the commonly held notion that housing in Canada is unaffordable, the 2020 RE/MAX Housing Affordability Report reveals that 75 per cent are currently undervalued.
“Despite the many challenges that continue to plague Canadians when it comes to the prospect of home ownership, such as record debt loads, there is promising opportunity across the country to enter the market,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “That said, the national housing market still has challenges to overcome, especially in centres like Toronto where demand is far outstripping supply, pushing prices up considerably as a result. We need to continue to push for an increase in housing supply for buyers and renters, but we have yet to see a comprehensive national housing strategy to help facilitate this shift.”
A Leger survey conducted on behalf of RE/MAX reveals that 38 per cent of Canadians claim that the high price of real estate is one of the biggest obstacles preventing them from buying a home.
Also on their list was an insufficient salary level preventing them from saving for a down payment (26 per cent) and a fear of rising interest rates (17 per cent). Meanwhile, the majority of RE/MAX brokers (56 per cent) claim that low or shrinking inventory is a more common factor.
Emerging trends like co-ownership with friends and family have become common in markets such as Vancouver and Toronto. Sharing a single-family home between two families, dividing the floors between them, or children seeking financial support from parents for down payments are becoming more common practices in Brampton, Edmonton and Ottawa.
Of the regions surveyed, Winnipeg, Regina and Halifax are currently the most affordable markets with average sales prices of $281,105, $301,473, and $319,071 respectively. Vancouver, Toronto and Mississauga are currently the least affordable regions in Canada, with average sales prices of $1,195,923, $883,520 and $760,005 respectively.
“All levels of government must work together to find a solution to Canada’s inventory issue, as the market will remain elusive for many otherwise,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “In the interim, working with experienced, professional agents can provide insight into creative and effective ways to navigate the current housing landscape.”
In Toronto, factors such as the OSFI mortgage stress test, listing shortages, rising prices and saving enough for a down payment are cited as preventing buyers from purchasing property. Buyers in this region are primarily looking to purchase condominiums, but as one of Canada’s least affordable housing markets, they continue to be priced out.
Despite recent price depreciation, Vancouver continues to experience affordability challenges. The mortgage stress test as well as government taxation policies are the leading factors preventing home ownership. Similar to Toronto, buyers are predominantly looking for condominiums, followed by townhomes as more affordable options.
Regina is currently the most affordable city in Canada with a total average sale price of $301,473 and on average, only 12 per cent of monthly income required to carry a typical mortgage in the area.
First-time buyers typically look for single-detached homes. Given the undervaluation of the market, co-ownership with friends and family has not been a typical practice. Buyers do not report being priced out of this market, which has seen Canada’s most affordable housing prices for the past seven years.
Halifax is also currently exempt from experiencing the affordability challenges seen in other regions across Canada. In this fairly valued market, buyers do not report being priced out of the market, struggling through the mortgage stress test, or needing to implement creative tactics to enhance affordability.