The average cost of a home in Canada is now 141% higher than the median household income, according to a new report published on Thursday.
The data, compiled by Rates.ca, found that a Canadian family earning the median household income of $79,876 would be able to reasonably afford a home costing $315,000. However, the average home in Canada is now going for $757,600.
In Toronto and Vancouver, the housing market lists an average of $1 million per home.
Additionally, mortgage insurers won’t insure a home over $1 million, which means interest rates can be raised and more is asked of the initial down payment, noted the report.
Including the uninsured mortgage costs, the average home price in Toronto is 162% higher than that of the median family income. In Vancouver, that disparity shoots up to 195%.
Population growth and increased income are among the contributing factors, according to Canadian Mortgage and Housing Corporation (CMHC) deputy chief economist Aled ab Iorwerth.
“But now, as demand is going up, these cities are quite slow in increasing their housing supply,” he said.
Provinces like Alberta offer more affordable housing in their major cities when compared to Toronto and Vancouver, however the median income of a Calgary family would still need to be 43% more to afford the cost of an average home in the city.
“While Alberta overall is generally considered more affordable than Ontario and British Columbia, Stampede City has seen heavier interprovincial and international migration in the past few months, resulting in a rise in the cost of housing,” read the report.
“Another reason for the rapidly heating housing market is Calgary’s emerging reputation as a high-tech hub, which has attracted a post-pandemic bump of new residents.”
The only major Canadian city where a median-earning family can afford the cost of an average home is Edmonton. This is due in part to Edmonton’s efforts on new construction and a slowing economy which has alleviated the pricing on houses.
“Following the significant decline in oil and gas prices in 2015 (to) 2019, economic activity in Edmonton moderated a fair bit,” said Taylor Pardy, chief economist with the CMHC.
“This has allowed housing supply to catch up and maintain that ample supply for much of the past decade, leading to flat or even declining prices in certain segments of the housing market.”
In Atlantic Canada, the average cost of housing varies but in its larger cities, home values remain some of the highest in the county.
In Halifax, the average home costs 83% more than the income of a typical household due to imbalances in the supply chain.
“Demand for housing in the last few years has grown due to higher-than-normal population growth,” said CMHC economist Kelvin Ndoro in the report.
“However, the supply of new housing units has not kept pace with demand, and some factors that can affect supply of housing can be construction costs, land prices, land-use regulations, and interest rates.”
While much more affordable in cities like Saint John, N.B. and St. John’s, Nfld., where the average cost of a home is around $300,000, that figure is still 7% higher than the median household income.
