Data: The minimum income you can earn to own a house in Canadian major cities
A homebuyer would need less income now to qualify for an average-priced home in a major Canadian city when compared to how much it was costing in the summer, according to new data from mortgage brokerage Ratehub.ca.
The brokerage analyzed 10 cities across Canada using October 2022 real estate data and compared data from June and August.
Homes across the country “are becoming more affordable,” said Ratehub.ca marketing strategist Jon Jilani in a report released on Nov. 16, 2022.
“With the Bank of Canada signalling that the worst of the rate hikes may be behind us”, the report noted, there was a reason to be “cautiously optimistic” about home affordability in Canada.
Ratehub.ca looks at the minimum annual income required to buy an average-priced home in Canada’s 10 major cities. The analysis keeps into account the changes in mortgage rates, stress test rates, and real estate prices.
RateHub.ca Co-CEO James Laird said in a news release on Wednesday that it is likely that June 2022 was the low point for affordability since mortgage rates were up and home prices had not yet softened significantly.
The data collected from Ratehub.ca showed that Victoria had the highest drop in income and average-priced homes in October. The average price of a home in Victoria last month was $915,300, with a stress test rate of 7.44 per cent and a mortgage rate of 5.44 per cent.
Homebuyers would need to earn an annual income of at least $178,890 a year in October to qualify for a mortgage for an average-priced home, with a 20 per cent down payment.
Vancouver remained the most expensive city in Canada to buy an average-price home. One would need an income of $220,700 in order to be able to afford an average home worth $1,148,900. Toronto required income of $211,650.
The report noted that despite Vancouver being the most expensive city in Canada for buying a house, it is also where the prices have “declined the most substantially over the last few months.”
“As affordability continues to improve, we will likely see homebuyers resume their search in the new year. We will have to see if sellers are interested in listing their homes at values that are significantly lower than their peak,” Laird said.
The report shows the data of October for other 7 Canadian cities:
Halifax: the income of $101,750 can afford an average home worth $484,800
Edmonton: the income of $81,600 can afford an average home worth $372,400
Hamilton: the income of $164,800 can afford an average home worth $836,800
Montreal: the income of $105,330 can afford an average home worth $504,800
Ottawa: the income of $127,900 can afford an average home worth $630,800
Winnipeg: the income of $75,320 can afford an average home worth $337,400
Calgary: the income of $106,800 can afford an average home worth $513,000
This article was reported by CTV News.