With the skyrocketing home prices and increasing mortgage rates, new data from Point2Homes reveals that a significant number of renters in Canada’s major cities are unable to afford to buy a starter home.
According to data published on Tuesday, renters in 36 of Canada’s 50 largest cities earn 60 per cent less than required to own a starter home. In 11 of these cities, starter home inventory is zero with 26 more cities displaying shares of starter homes below 10 per cent.
Starter homes, also known as entry-level homes, are traditionally small in size and priced around $200,000, however, the concept of a starter home has changed in today’s pricy housing markets.
Now, according to Point2Homes, a starter home simply refers to the first home a person owns, regardless of its size or price—its definition is determined by the current market conditions.
For its report, the platform looked at renter household income in Canada’s 50 largest cities and designated starter homes to be valued at half the respective city’s benchmark price to determine where they could switch to homeownership.
According to the report, 75 per cent of renters residing in 36 of Canada’s largest cities are unable to afford to buy a starter home.
Due to the sharp increase in prices, Point2Homes’ report shows Canadian starter homes now cost more than $500,000, and in three cities, more than $700,000.
Renters in 12 cities in Ontario earn 42 to 59 per cent less than the amount needed to buy a starter home.
For instance, renters in Richmond Hill, Oakville, Markham, and Vaughan make an average of $70,000 annually but they would need around $160,000 and close to $170,000 to afford a starter home in their city.
These are the 36 Canadian cities where renters can’t afford a starter home, according to Point2Homes:
1- Richmond Hill, ON
2- Oakville, ON
3- Markham, ON
4- Vaughan, ON
5- Richmond, BC
6- Vancouver, BC
7- Toronto, ON
8- Milton, ON
9- Whitby, ON
10- Coquitlam, BC
11- Burlington, ON
12- Brampton, ON
13- Mississauga, ON
14- Burnaby, BC
15- Ajax, ON
16- Surrey, BC
17- Langley, BC
18- Oshawa, ON
19- Saanich, BC
20- Kelowna, BC
21- Abbotsford, BC
22- Guelph, ON
23- Hamilton, ON
24- Waterloo, ON
25- Cambridge, ON
26- Barrie, ON
27- Kitchener, ON
28- Ottawa, ON
29- London, ON
30- St. Catharines, ON
31- Montreal, QC
32- Windsor, ON
33- Kingston, ON
34- Halifax, NS
35- Greater Sudbury, ON
36- Longueuil, QC
Although household income in cities where starter home prices are very similar—such as in Windsor, Ont., and Calgary, Alta.—there are big differences between municipalities. In Windsor, the average renter’s household income is $40,241 annually, in Calgary, it’s close to $69,000. Point2Homes’ data shows Calgary renters make five per cent more than the required money to buy a starter home in their city, while Windsor renters earn 48 per cent less than the needed money to buy a starter home in their city.
According to the report, renters in 14 cities across Canada earn more than the income required to buy a starter home in their city.
In these cities, renters earn two to 52 per cent more than the minimum income needed to afford a starter home there.
Among the 10 cities in Canada where renters have the opportunity to purchase a starter home for under $200,000, Edmonton, Alta., and St. John’s, N.L. stand out, according to the report. Renters in these cities not only have access to more affordable starter homes, but they also earn 52 percent and 50 percent higher than the minimum income required to buy one in their respective city.
These are the 14 cities in Canada where renters in that city can afford to buy a starter home, according to Point2Homes:
1- Edmonton, AB
2- St. John’s, NL
3- Regina, SK
4- Saguenay, QC
5- Trois-Rivières, QC
6- Quebec City, QC
7- Lévis, QC
8- Winnipeg, MB
9- Saskatoon, SK
10- Gatineau, QC
11- Calgary, AB
12- Sherbrook, QC
13- Terrebonne, QC
14- Laval, QC
Methodology
§ For this study, calculations were made based on the median value of starter homes in Canada’s 50 largest cities, which means there could be cheaper/more affordable options on the market.
§ Starter homes were considered to be the homes valued at half the benchmark price in each of the 50 cities included in the analysis. Rather than a fixed price, Point2Homes chose this method because it better reflects the differences between markets in terms of housing costs, incomes, and housing options.
§ Point2Homes also looked at renter household incomes in the 50 largest U.S. cities, based on data from the Canada Mortgage and Housing Corporation, adjusted according to Statistics Canada figures.
§ To calculate the income required to afford the monthly mortgage payments on the median-priced starter home, Point2Homes considered that the monthly mortgage should not represent more than 30 per cent of a renter household income, assuming a 20 per cent down payment was already covered and the loan was made based on a 5.75 per cent, 25-year fixed-rate mortgage.
§ Point2Homes also took into consideration property taxes, based on various local sources and insurance costs.
Reporting for this story was paid for through The Afghan Journalists in Residence Project funded by Meta.
WETASKIWIN, Alta. – A judge says a man who stabbed and killed a 17-year-old girl in an Alberta high school must serve 12 years of a life sentence before he can apply for parole.
Dylan Pountney was convicted earlier this year of second-degree murder.
He was 19 when he stabbed Jennifer Winkler as she sat in a classroom at the school in Leduc, south of Edmonton, in 2021.
Horrified students and a teacher witnessed the killing.
A Crown prosecutor asked that Pountney serve 15 years before he can apply for parole, while the defence recommended 10 years.
The girl’s father told the sentencing hearing that he hopes Pountney rots in hell.
This report by The Canadian Press was first published Sept. 5, 2024.
VANCOUVER – The union for striking Metro Vancouver HandyDART transit workers has accused security for their employer of not allowing a driver to pick up bus keys to drive essential service shifts just days before mediation talks.
However, employer Transdev Canada says the incident on Wednesday morning was the result of a mistake, and only resulted in a 15-minute delay.
Most trips on the accessible transit service have been halted in Metro Vancouver since Tuesday amid a contract dispute, with mediation set to begin Sunday, but essential trips continue for people undergoing certain medical treatments.
The Amalgamated Transit Union Local 1724 says in a news release that when members tried to enter Transdev’s Burnaby depot on Wednesday, they were denied access despite previously agreeing to continue to perform essential medical trips.
In a statement, Transdev says a security guard accidentally placed a drivers’ bags and keys inside the depot, contrary to procedure.
It says a driver who entered the site at 5:15 a.m. was able to enter the depot around 5:30 a.m., and the guard has since been reminded of the correct procedure.
Transdev says there were only two service delays on Wednesday and that by 5.30 a.m., all departures were on time and no customer of the door-to-door service missed their appointment.
This report by The Canadian Press was first published Sept. 5, 2024.
