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Is your salary enough to buy a home in these Canadian cities? Here’s how much you need to earn based on July 2024 real estate data.
The first two rate cuts from the Bank of Canada (BoC) are finally making a mark on housing affordability.
According to the latest monthly affordability report from Ratehub.ca (Ratehub Inc. owns both Ratehub.ca and MoneySense), it became easier to qualify for a mortgage for the average-priced home in every market studied across Canada—a first since January. To show how borrowing conditions are evolving in real time, the calculations reveal the minimum annual income required to buy an average-priced home in some of Canada’s major cities based on month-over-month real estate data. The analysis is based on the average five-year fixed mortgage rate, as well as the resulting mortgage stress test, in addition to average home prices as reported by the Canadian Real Estate Association, for the month of July.
This latest edition (updated monthly, so bookmark this page) is impacted by the recent rate cuts from the BoC which are now making their way into consumer mortgage rates. The two quarter-point decreases made in June and July have cumulatively brought Canada’s benchmark cost of borrowing from 5% to 4.5%. In addition to Canada’s prime rate lowering to 6.7%—which has in turn lowered variable mortgage rates—dropping bond yields have also pulled fixed mortgage rates down, with the new average five-year fixed rate falling to 5.29%.
Here’s how it played out in housing markets across Canada.
Check out the chart below to see how affordability changed between June and July in Canada’s main housing markets, based on the income required to qualify for a mortgage. The stress test rates used are 7.47% for June and 7.29% for July. Mortgage rates used are 5.47% in June and 5.29% in July.
| City | Average home price in June | Average home price in July | Change in home price | Income required in June | Income required in July | Change in income |
| Toronto | $1,110,600 | $1,097,300 | -$13,300 | $214,360 | $208,950 | -$5,410 |
| Vancouver | $1,207,100 | $1,197,700 | -$9,400 | $231,700 | $226,680 | -$5,020 |
| Hamilton | $849,900 | $843,500 | -$6,400 | $167,550 | $164,040 | -$3,510 |
| Victoria | $872,800 | $872,600 | -$200 | $171,650 | $169,200 | -$2,450 |
| Montreal | $537,700 | $533,100 | -$4,600 | $111,460 | $109,170 | -$2,290 |
| Calgary | $589,000 | $588,600 | -$400 | $120,670 | $118,980 | -$1,690 |
| Ottawa | $647,700 | $648,900 | $1,200 | $131,210 | $129,650 | -$1,560 |
| Edmonton | $401,100 | $399,700 | -$1,400 | $86,920 | $85,560 | -$1,360 |
| Winnipeg | $362,700 | $361,600 | -$1,100 | $80,020 | $78,820 | -$1,200 |
| Halifax | $548,800 | $551,600 | $2,800 | $113,450 | $112,420 | -$1,030 |
| Regina | $318,100 | $318,400 | $300 | $72,010 | $71,180 | -$830 |
| Fredericton | $308,200 | $311,800 | $3,600 | $70,230 | $70,020 | -$210 |
| St. John’s | $345,200 | $349,700 | $4,500 | $76,880 | $76,720 | -$160 |
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While still among Canada’s priciest housing markets, real estate price growth has stalled in Toronto as home buyers remain firmly on the sidelines. According to the Toronto Regional Real Estate Board (TRREB), a total of 5,391 homes sold across the Greater Toronto Area region in July. That marks a 3.3% increase from 2023’s even deeper summer doldrums, but slid -13.2% from June. This is due to overall price exhaustion in the market and expectations that rates are set to fall further in the coming months. Buyers aren’t keen to move until they see considerably lower interest rates come down the pipe, all while more supply comes to market. As a result, the average home price fell by $13,000 between June and July, to $1,097,300. That means, if you’re a prospective Toronto buyer, you’d need $5,410 less in income to purchase a home in July, compared to June.
Vancouver home sales continued to slide in July, marking a -5% annual decrease with 2,333 properties sold. Meanwhile, sellers continue to enter the market in droves, with new listings up a whopping 20.4% compared to July 2023, reports the Greater Vancouver Realtors (formerly REBGV). That’s provided home hunters with lots of choice, and placed the market firmly in balanced territory. However, such a combination does little to support the city’s average home price, which fell by $9,400, to $1,197,700. As a result, Vancouver home buyers saw their required income fall by $5,020 in July, placing the west coast city in second in terms of improved affordability.
Hamilton is one of the few markets in southern Ontario boasting an average home price below the $1-million mark, but that hasn’t helped keep sales and home prices from falling. According to the Realtors Association of Hamilton-Burlington, the number of property transactions fell 6.6% year over year, with a total of 804 trading hands. Meanwhile, the months of supply in the region rose above four for the first time since 2010 for July. That’s led to the average home price dipping $6,400 to $843,500, and the required income for home buyers down by $3,510.
Newsletter
Decreased mortgage rates actually made it easier to purchase a home in each of the 13 markets shown above, but some areas saw more relief than others. Here are the markets where borrowing costs eased by the smallest margin.
Unlike other parts of Canada, sales here have remained brisk throughout the summer on the east coast. According to the Newfoundland and Labrador Association of Realtors (NLAR), home sales rose 15.7% year over year in the region in July, at 641 units—14.5% above the 10-year average. Meanwhile, new listings in the city came in 7.8% below that long-term benchmark. That led to a snappy uptick in prices, with the average in St. John’s increasing by $4,500 to $349,700. However, lower mortgage rates were enough to offset this increase, with the required income dropping by $160.
Similarly to Newfoundland, New Brunswick real estate has remained in high demand throughout the summer months. A total of 931 homes sold across the province in July, marking a 12.2% increase from last year, also 4.7% above the 10-year average. Sales were up 2.3% in Fredericton, specifically. In response, the average home price rose by $3,600 to $311,800. The required income to qualify for a mortgage, meanwhile, dropped by $210.
As has been the long-term trend, the Prairie real estate markets are booming, with sales in Saskatchewan reflecting strong housing market demand, up 10% annually with 1,667 transactions. That’s offset any significant relief in supply, with tight seller-friendly conditions across the province’s major markets. In Regina, the average home price increased by $300 to $318,400. However, lower mortgage rates decreased the required income by $830, compared to June.
The above chart shows just how mortgage borrowing conditions shifted on from June to July, based on the required income needed to purchase the average-priced home in each region. Canadian home mortgage borrowers looking to calculate their own affordability, or are shopping around for the best mortgage rate, can use the MoneySense mortgage affordability calculator, which personalizes outputs based on income, existing bills and debt obligations, as well as overall debt ratios.
Based on recent economic and inflation numbers both out of Canada and the United States, it’s looking all the more likely that interest rates will lower in North America until well into 2025. Currently, analysts are expecting the BoC’s trend-setting overnight lending rate—which sets the prime rate and variable borrowing products in Canada—to lower to a range between 2.5% to 3% by next year.
Should this materialize, we could see mortgage rates in Canada go as low as 3.45 at that time, which will help improve affordability further. That’s assuming home prices don’t overheat in the meantime.
Check this table to compare mortgage rates in Canada right now.
This is an unpaid article that contains useful and relevant information. It was written by a content partner based on its expertise and edited by MoneySense.
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It would be interesting to know how the Gross Debt Service (GDS) and Total Debt Service (TDS) ratios vary across the various major lenders, as well as how each of these two ratios might have shifted over the years (decades) of stable rates to more recent increased rates. Then there are the recently imposed ‘stress test’ rates to provide some assurance buffer which further increase required salary levels for approval. I was a first-time house buyer back in the 80’s with rates sky-rocketing to the mid-teens, and now amused at today’s wannabe buyers complaining with single-digit rates about a third of the rates I was paying. It seems the recent generation(s) is over-extended in their expectations, including spending habits/distractions (e.g., cell phones, etc.), and thinking that ‘home ownership’ is a right, versus ‘shelter’ is a right in Canada, and missing the point that one needs to improve their circumstances to aspire to the former instead of whining about single-digit mortgage rates.