Astronomically high Toronto home prices may have fallen a bit since the Bank of Canada started hiking interest rates in March, but purchasing property is no more affordable than it was last year.
Quite the contrary, in fact.
A new report from RBC Economics suggests that home ownership costs are skyrocketing as interest rates soar, driving the bank’s aggregate affordability measure to its lowest point in history at 62.7 per cent.
You see, lower home prices mean very little when, after six consecutive rate hikes in just nine months, nobody can secure the funds to buy one.
Qualifying for a mortgage on the purchase of a typical Toronto home at benchmark price (about $1,074,300 across all property types) has gone from difficult to nearly impossible for many buyers on account of interest rate hikes over the past year, according to RBC economist Robert Hogue.
It has never been harder financially to buy a home in Canada as it is right now, according to economists. Image via RBC Economics.
“Sky-rocketing home prices earlier in the pandemic raised the bar by several notches for Canadian buyers. But the spike in interest rates since March served a crushing blow in parts of the country,” reads Hogue’s latest report, entitled “Homebuyer blues: dreadful affordability gets worse in Canada.”
“To qualify for a mortgage on the purchase of a typical home (at the benchmark price) in the Vancouver area a buyer needed to earn a minimum of $200,000 annually in the third quarter of 2021. A year later, the qualifying income had soared 34% to an astounding $268,000.”
And in the Greater Toronto Area? You’ll now need to make at least $240,000 per year to get a mortgage on an average-priced home — much more if you’re looking in the 416, where the average price for a detached, single-family house is now around $1,616,700.
This marks a 29 per cent increase over the previous year, which may explain, at least in part, why home sales have dropped so drastically (sales are down by 41 per cent in Ontario, year over year.)
The amount of money people are spending on housing costs proportionate to their incomes has risen sharply in recent years, surpassing new highs every month. Image via RBC Economics.
“It’s never been so unaffordable to buy a home in this country. Further interest rate increases propelled RBC’s aggregate measures to yet new record highs nationally and in Victoria, Vancouver, Toronto, Ottawa and Halifax in the third quarter. (An increase in the measure represents a loss of affordability.),” reads the report.
“Affordability issues aren’t likely to reverse quickly. It will take more time for the market to absorb the rise in mortgage rates.”
But it will eventually absorb them, according to Hogue, after the market bottoms out this spring.
“The market correction’s silver lining is it’s setting the stage for some affordability improvement in the year ahead. We expect the national benchmark price to fall 14 per cent from its early 2022 peak, providing significant scope to lower ownership costs once interest rates stabilize,” predicts the economist.
“We think that could start in the early part of 2023—though the timing is poised to vary by market. Growing household income will partly drive the improvement process. It will likely take years to fully reverse the tremendous deterioration that took place since 2021.”
The national benchmark home price is expected to fall by as much as 14 per cent this spring when the market starts to rebalance. Image via RBC Economics.
This correction can’t come soon enough for Canadians, especially those living in B.C. and Ontario, where skyrocketing rent prices have made city life with no equity unsustainable.
With the average Toronto household now spending around 85.2 per cent of its income on mortgage payments, it’s hard to say owners are faring much better.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
VANCOUVER – Voters along the south coast of British Columbia who have not cast their ballots yet will have to contend with heavy rain and high winds from an incoming atmospheric river weather system on election day.
Environment Canada says the weather system will bring prolonged heavy rain to Metro Vancouver, the Sunshine Coast, Fraser Valley, Howe Sound, Whistler and Vancouver Island starting Friday.
The agency says strong winds with gusts up to 80 kilometres an hour will also develop on Saturday — the day thousands are expected to go to the polls across B.C. — in parts of Vancouver Island and Metro Vancouver.
Wednesday was the last day for advance voting, which started on Oct. 10.
More than 180,000 voters cast their votes Wednesday — the most ever on an advance voting day in B.C., beating the record set just days earlier on Oct. 10 of more than 170,000 votes.
Environment Canada says voters in the area of the atmospheric river can expect around 70 millimetres of precipitation generally and up to 100 millimetres along the coastal mountains, while parts of Vancouver Island could see as much as 200 millimetres of rainfall for the weekend.
An atmospheric river system in November 2021 created severe flooding and landslides that at one point severed most rail links between Vancouver’s port and the rest of Canada while inundating communities in the Fraser Valley and B.C. Interior.
This report by The Canadian Press was first published Oct. 17, 2024.
