A new survey from Leger, commissioned by RBC Economics, found ‘pre-first-time homebuying Canadians who have never owned a home and are not yet in a position to buy, are feeling more optimistic about future homeownership..The survey said 78% of pre-first-time buyers will soon be in a better position to buy a home and 65% feel good about housing markets over the next 12 months..A lot of the optimism is based on prices being down, year-over-year, which they are, but affordability hasn’t improved, due to higher mortgage rates brought on by the Bank of Canada’s aggressive hikes to it overnight rate in the last 12 months and it takes more money to buy today than a year ago..Ratehub.ca calculated the minimum household income required to buy the average home in Canada’s major markets, comparing data from March 2022 to March 2023 and illustrating how changing mortgage rates, stress test rates and real estate prices are impacting the income needed to buy a home, as shown on the chart below..“Even though home values are down in nine out of 10 cities we looked at, affordability has actually gotten worse because rates have increased so much that Canadians now qualify for less compared to a year ago,” says James Laird, Co-CEO of Ratehub.ca and president of CanWise mortgage lender..“Homebuyers have to earn between $5,650 and $21,360 more in additional annual income to buy a home, compared to March 2022.”.“With supply of new listings tight and some home buyers returning to the market, don’t expect home affordability to improve in the coming months.”. How much do you need to earn to buy a home in CanadaHow much do you need to earn to buy a home in Canada .Highlights:.Calgary was the only city which had a year-over-year increase in price.Vancouver saw the biggest increase year-over-year, with $21,360 in additional income required.Hamilton was the only city to see home affordability improve year-over-year with $4,460 less income required due to a drop in average home price of $224,200, the largest decline of all the cities.Ottawa had the smallest increase in required income..“While it’s looking increasingly likely the Bank of Canada finished its rate-hiking cycle, paving the way for stabilizing mortgage rates, borrowing costs are still steeply higher than they were a year ago,” says Penelope Graham, director of content at Ratehub.ca..“Given buying conditions are already starting to heat back up in Canada’s largest markets and supply remains at a record low, pressure will continue to build under prices.”.*Data in the chart is based on a mortgage with 20% down payment, 25-year amortization, $4,000 annual property taxes and $150 monthly heating. Mortgage rates are the average of the Big Five Banks’ five-year fixed rates in March 2023 and March 2022. Average home prices are from the CREA MLS® Home Price Index (HPI).
A new survey from Leger, commissioned by RBC Economics, found ‘pre-first-time homebuying Canadians who have never owned a home and are not yet in a position to buy, are feeling more optimistic about future homeownership..The survey said 78% of pre-first-time buyers will soon be in a better position to buy a home and 65% feel good about housing markets over the next 12 months..A lot of the optimism is based on prices being down, year-over-year, which they are, but affordability hasn’t improved, due to higher mortgage rates brought on by the Bank of Canada’s aggressive hikes to it overnight rate in the last 12 months and it takes more money to buy today than a year ago..Ratehub.ca calculated the minimum household income required to buy the average home in Canada’s major markets, comparing data from March 2022 to March 2023 and illustrating how changing mortgage rates, stress test rates and real estate prices are impacting the income needed to buy a home, as shown on the chart below..“Even though home values are down in nine out of 10 cities we looked at, affordability has actually gotten worse because rates have increased so much that Canadians now qualify for less compared to a year ago,” says James Laird, Co-CEO of Ratehub.ca and president of CanWise mortgage lender..“Homebuyers have to earn between $5,650 and $21,360 more in additional annual income to buy a home, compared to March 2022.”.“With supply of new listings tight and some home buyers returning to the market, don’t expect home affordability to improve in the coming months.”. How much do you need to earn to buy a home in CanadaHow much do you need to earn to buy a home in Canada .Highlights:.Calgary was the only city which had a year-over-year increase in price.Vancouver saw the biggest increase year-over-year, with $21,360 in additional income required.Hamilton was the only city to see home affordability improve year-over-year with $4,460 less income required due to a drop in average home price of $224,200, the largest decline of all the cities.Ottawa had the smallest increase in required income..“While it’s looking increasingly likely the Bank of Canada finished its rate-hiking cycle, paving the way for stabilizing mortgage rates, borrowing costs are still steeply higher than they were a year ago,” says Penelope Graham, director of content at Ratehub.ca..“Given buying conditions are already starting to heat back up in Canada’s largest markets and supply remains at a record low, pressure will continue to build under prices.”.*Data in the chart is based on a mortgage with 20% down payment, 25-year amortization, $4,000 annual property taxes and $150 monthly heating. Mortgage rates are the average of the Big Five Banks’ five-year fixed rates in March 2023 and March 2022. Average home prices are from the CREA MLS® Home Price Index (HPI).
