Photo: KMR Photography/Flickr
It’s no secret houses in Canada’s big cities are expensive, but a new study from Canadian real estate company Zoocasa reveals just how much you need to make to afford an average home in 13 major markets throughout the country.
Spoiler alert: If you’re not earning six figures in BC and Ontario’s priciest markets, you might be disappointed.
“Looking to purchase a home in one of Canada’s biggest cities? You’ll need to be among the highest echelon of income earners to do so in the most competitive markets,” writes Penelope Graham, Zoocasa’s managing editor, in a blog post about the study’s findings.
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The study looks at the minimum income needed to afford an average single-family house, based on the Canadian Real Estate Association’s (CREA)’s benchmark selling price measure, which eliminates luxury transactions from calculations to give a more accurate picture of what normal properties are going for.
For the purposes of the study, which doesn’t take carrying costs such as property taxes and heating into account, Zoocasa assumes buyers have a 20-percent downpayment and can obtain a 3.75 percent mortgage rate and 30-year amortization.
Based on this, house hunters in the Vancouver are by far the hardest up. They’d need to earn a minimum of $205,475 — which would put them in the top 2.5 percent of earners — to afford a single-family home at the local benchmark price of $1,441,000.
Homeowner aspirants looking outside the Vancouver area to nearby Victoria still require a six-figure income. The benchmark price of a single-family home in BC’s capital is $741,000, meaning a household income of $105,661, which is within the top 10 percent of incomes, is required.
In Toronto, a homebuyer also needs to be in the top 10 percent of earners. An income of at least $124,554 is needed just to afford the $873,100 benchmark price for a single-family home.
The bar to homeownership in Hamilton, roughly 60 kilometres from Toronto, is lower. There, an income of $89,834 is sufficient to cover the costs associated with buying a home priced at $630,000, the benchmark for Canada’s ninth-largest city.
But anyone with homeownership goals might want to set their sights on the Prairies. “[W]hile the study revealed just how high the minimum income thresholds are in these urban centres (Toronto and Vancouver), it also underscored the comparable affordability in the prairie markets,” notes Zoocasa’s Graham.
For instance, in Regina, affording a benchmark-priced house is only out of reach for the bottom 25 percent of earners, as per the study criteria. An income of $39,342 is good enough to afford a single-family home priced at $275,900.
Even in Calgary, the region’s main economic hub, the top half of earners can step on the property ladder. With a minimum income of $66,677, an average Cowtown house is attainable. The benchmark single-family home price is $467,600.