Buying a home remains out of reach for many families struggling to break into Canada’s booming housing market as home prices continue to soar alongside inflation and a higher cost of borrowing.

Among frustrated prospective buyers is Mac Ross, an assistant professor at Western University’s School of Kinesiology in London, Ont. He tells Global News that he’s struggling to find a home big enough for his growing family, even on a professor’s salary.

The family of four has been renting a two-bedroom home for the past few years, but the addition of a new baby pushed Ross and his wife to put together a down payment in search of a three-bedroom home five months ago.

Though he says they’ve found a couple of bungalows listed for just under $500,000 that fit their budget and would accommodate the family, the properties were scooped up for more than $200,000 above asking.

“At that point, there’s nothing we can do. It just kind of boggles the mind that people were willing to pay that much,” he says.

The family has adopted a holding pattern in their house hunt now, and is waiting to see if the spring brings any calmer conditions. Rent is stable at their current home and Ross says they’ve been able to absorb the hit from rising prices and interest rates, though their buying budget is maxed out.

They can’t wait forever, though, as the baby is quickly growing to need a bedroom of her own, putting the pressure on to make their current space work or rent a more expensive home that will quickly burn through their downpayment savings.

“This was like our last chance, it was all we could possibly get. It’s just impossible,” Ross says. “We won’t be able to get a home, I don’t know, until the bubble goes or something.”

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The Ross family is not alone in their dim outlook on the Canadian housing market.

A recent report from Mortgage Professionals Canada (MPC) showed 29 per cent of respondents felt now was a good time to buy a home in their community — the lowest that figure has hit in the 12 years of the survey.

MPC’s survey captured impressions from more than 2,000 people, the vast majority of whom were already homeowners, however. The market outlook is even worse among the roughly one in five respondents who don’t own property: only three per cent said now was a good time to buy a home.

A slew of factors are coming together now to put homes out of reach.

Average home prices rose 20.6 per cent year over year in February, according to stats released this week from the Canadian Real Estate Association (CREA).

Inflation levels, meanwhile, are at a more than 30-year high, Statistics Canada said Wednesday, putting particular pressure on consumers at the gas pump and the grocery store.

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The Bank of Canada began increasing its key interest rate target at the start of this month, a move that looks to tamp down surging inflation and calm the housing market but simultaneously raises the cost of borrowing and reduces house hunters’ buying power.

Though wages are also generally growing in Canada’s tight labour market, Kyle Dahms, economist with National Bank of Canada, says home price growth is “outpacing” compensation for most Canadians.

National Bank’s Housing Affordability Monitor at the end of last year showed the ability for Canadians to pay down their mortgages in major cities across the country deteriorated every quarter of 2021.

Though the first quarter of 2022 has yet to wrap, Dahms says rising interest rates, alongside other factors hitting Canadian pocketbooks, will not help prospective buyers like Ross.

“That’s going to be somewhat biting for homebuyers,” Dahms says.

He adds that the spring market, typically a busy time in Canadian real estate, could see some relief with additional listings coming to market as owners look to “offload” properties to minimize mortgage payments or maximize returns.

A National Bank report from Tuesday showed new listings surged 23 per cent in February, though total inventory remains low at only 1.6 month’s supply.

It’s too soon to say whether the growing stock will become a sustained trend, Dahms says, but a surge of new listings could ease competition and provide an entry point into the market for prospective buyers.

“If it does that, (the market) could open up.”

Some real estate watchers are already seeing a change on the horizon of Canada’s real estate market in response to rising interest rates.

Toronto realtor Pritesh Parekh with Century 21 says he’s already seen the “psychological” shift tied to interest rates affecting his clients.

He says the initial 25-basis-point hike isn’t enough to grind the market to a halt.

Parekh pictures it more like the market was running at 150 km/h and the central bank’s announcement saw buyers ease off the accelerator to bring it to 120 km/h — still speeding, but to a lesser degree.

A few clients have come to him recently, however, and told him they’re putting their search on hold for the foreseeable future, so fed up are they by bidding wars and unattainable properties in Toronto.

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Even with some pausing the search, Parekh believes current pressures on Canadian’s pocketbooks are not lessening the demand for housing, but changing it.

“With all these factors, the rate increases, the price increases, the inflation … I’ve seen the demand change versus flooring,” he says.

While the past year of the pandemic has seen him work largely to find detached homes for his clients, he’s seeing some demand shift back towards Toronto’s more affordable downtown condo market.

He’s also increasingly doing deals outside the GTA for those who can’t afford the Toronto real estate market. He says he recently helped a client get a $600,000 side investment in Kingston to get an affordable stake in the housing market and passive income while continuing renting back in Toronto.

Parekh cites another example of a client who, forgoing plans of buying a detached home in the GTA, bought a condo in Burlington, Ont., and set out to renovate the bathrooms and other fixtures immediately in hopes of moving up to a townhome in the next few years.

“I’ve seen a shift from saving for your dream home to stepping up to your dream home,” he says.

Parekh says that in the past three months, three clients have told him that they no longer need his help to find a home.

It’s not because they’re giving up the hunt or found a property in Toronto — instead, they tell him they’re moving to Calgary.

Calgary is one of the major cities that remains a bit more affordable than surging markets such as Toronto or Vancouver.

The median price of a home in Calgary was just below $500,000 in the second week of March, according to the city’s real estate board. In National Bank’s most recent housing affordability report, the household income needed to afford the median home in the city was just over $106,000 — roughly half the same income needed to buy a home in Toronto.

Dahms adds Quebec City, Winnipeg and Edmonton as a few other standouts that have seen prices appreciate at a slower rate.

Indeed, Ross has found his frustrations amplified seeing three-bedroom homes going for half the price in other parts of the country as they do in London.

The Nova Scotia native says he’s seen east coast real estate remain an affordable option for Maritimers back home, and says that if the housing market in Canada doesn’t improve in the next two years, it’s inevitable that he might have to move his family to more welcoming harbours.

“It gets to the point where you have to consider if you can continue on,” he said.

“Even though this is my dream job … I’ll never, ever, have another opportunity, probably, to get hired at a school like Western. But if I can’t afford anything, it becomes a discussion you have to have.”

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