These Canadian cities have the least expensive first-year homeownership costs

It’s tough out there for anyone trying to buy or sell a house but it might be toughest for those aiming to be a first-time homeowner.

There’s hope for aspiring buyers as house prices are coming down, but mortgage rates are rising so fast that affordability continues to be an issue.

As if being forced to shell out over a million dollars for an average-priced Toronto home weren’t bad enough already, buying a place actually costs a lot more than what the property is listed for.

Between closing costs, down payments, property taxes, insurance, and monthly mortgage payments, the first year of homeownership, specifically, can get pretty expensive, potentially surprising those who aren’t prepared with some heavy, unexpected financial demands.

“Never has the dream of becoming a homeowner in Canada felt just like that — a dream,” reads a new report from Point2 on how first-year homeownership costs vary in different markets across the country.

“As homeownership rates declined to a 20-year low back in 2021, potential buyers might still be inclined to postpone ownership plans due to ongoing inflation and out-of-reach home prices. The first year of homeownership, in particular, can be daunting, given the down payment, closing costs, first mortgage payments, homeowners’ insurance, and property taxes — all new to first-time homebuyers.”

Released by the international real estate search portal on Wednesday, the report compares Canada’s 50 most-populous cities, comparing them against one another using data from two categories: upfront costs (assuming a 20 per cent down payment based on local benchmark prices) and annual recurring costs.

But not everyone should lose hope — it just depends on where you are willing to live.

“Homeownership is more doable in some cities than in others,” according to a new report from online real estate marketplace Point2 , which shows just how much the costs vary across the country.

Analysts found that the first year of homeownership is literally five times as expensive in some Ontario cities as it is in Quebec.

Only one single Ontario city (Greater Sudbury) actually made Point2’s list of the top 15 most-affordable places for first-year homeowners in Canada. Nine cities were in Quebec, two were in Saskatchewan, and one each was located within the provinces of Alberta, Manitoba and Newfoundland.

“Feeling perpetually priced out of today’s market, buyers have to decide whether to wait it out or bite the bullet — and the cost of the first year of homeownership is essential to making that choice in good conscience,” reads the Point2 report.

“For example, the first year of homeownership averaged more than $315,000 in Ontario and British Columbia cities such as Richmond Hill, Markham ($383,469), Oakville ($378,122), Vancouver, and Toronto ($315,031).”

Richmond Hill, Ontario, actually posted the highest tab for first-year homeowners at a staggering $400,700 (a 20 per cent downpayment alone makes up $281,700 of that figure, while closing costs come in at an average of $22,947.

Toronto was found to have the highest closing costs in Canada at an average of $28,951, but registered as the sixth-most expensive market overall for someone’s first year as a homeowner.

By contrast, first year ownership costs averaged only $74,342 in Saguenay, QC, which took the top spot on Point2’s list of affordable markets.

The Greater Sudbury Area, along with Edmonton and Calgary, gave the lowest closing costs (less than $2,000), unlike Toronto (nearly $29,000) and Vancouver ($23,215).

Analysts also looked at how many years it would take the average renter to save up for the upfront costs required to transition into homeownership, then went a step further and calculated how many years it would take to cover the full cost of the first year of homeownership.

There are new tax credits that Canadians can claim, like the first-time home buyers’ tax credit and the home accessibility tax credit, but those incentives, financial aid programs and “dwindling competition for already-scarce inventory” may not be enough for potential buyers.

St. John’s has the most affordable homeowners’ insurance ($780), as well as the second-lowest property taxes ($2,625).

According to the report, those in Edmonton take an average of five years to save up and cover all of the upfront costs but it can take 20 years or more in four Ontario cities (Richmond Hill, Markham, Oakville and Vaughan).

Whereas in Toronto and Burlington, it can take about 17 years, 16 years in Milton, Whitby and Mississauga, 15 years in Brampton and Ajax, and 13 years in Oshawa.

These are the top 15 of Canada’s 50 most-populous cities where the first year of homeownership would be the least expensive:

• Saguenay, QC
• Trois-Rivières, QC
• Québec City, QC
• Regina, SK
• St. John’s, NL
• Lévis, QC
• Winnipeg, MB

• Edmonton, AB
• Sherbrooke, QC
• Saskatoon, SK
• Terrebonne, QC
• Gatineau, QC
• Greater Sudbury, ON
• Longueuil, QC
• Laval, QC

“Considering the measures taken to make it easier for Canadian individuals to buy a home – such as the tax-free First Home Savings Account plan or the recently introduced Prohibition on the Purchase of Residential Property by Non-Canadians Act – there’s hope that ownership rates might start to inch up,” concluded Point2 when releasing its findings.

“But, despite financial aid programs and dwindling competition for already-scarce inventory, the costs of homeownership weigh on any potential buyer.”

Part of the article was reported by BlogTO.