Canadians feel their own neighbourhoods are too pricey

Canadians feel priced out of their own neighbourhoods

By Romana King on November 26, 2015
Estimated reading time: 2 minutes

38% of Canadian homeowners felt that housing in their area is unaffordable

Are you trying to buy a home right now? Do you feel priced out of the market? According to a new Manulife Bank of Canada study you’re not alone.

Is your neighbourhood affordable?

More than a third (38%) of Canadian homeowners felt that housing in their area is unaffordable with the most pessimistic outlook coming from those living in British Columbia.

The survey revealed that 46% of those looking to buy in one of Canada’s largest urban areas—Vancouver, Calgary, Edmonton, Toronto, and Montreal—would describe their housing market as
affordable. The perceived lack of affordability was most acute in Vancouver, where just one in three (33%) of buyers indicating that housing was affordable.

But not everyone in Canada saw housing affordability as an issue. About 68% of buyers looking for a home outside of the largest Canadian cities described their real estate market as affordable—with the most optimistic homeowners located in Atlantic Canada (where 83% described their neighbourhood as affordable).

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Housing prices expected to increase

According to the survey results, Canadians don’t expect housing affordability to get better over the course of the next year—with two in three homeowners anticipating house price increases in their area.

However, homeowners in Alberta, Manitoba and Saskatchewan didn’t share this sentiment, with almost one in five (19%) expecting prices to decline in the next 12 months.

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Housing costs put pressure on household budgets

The survey also found that more than a quarter (27%) of homeowners didn’t feel they could handle an unexpected household expense, such as a major car repair or a furnace replacement, while 38% reported already being “caught short” over the past year with an unexpected expense.

Those facing unexpected expenses found a variety of ways to cover the bills—with 33% using a line of credit, 32% using a high-interest credit card to cover the cost, 23% using money from their emergency fund savings, and 14% borrowed money from a family member.

The size of our rainy-day accounts also suggests that Canadians are less prepared for unexpected expenses than they believe. Only 24% of home owners reported setting aside $5,000 for an emergency; half indicate they either have “$1,000 or less”, or don’t know how much they have for emergencies.

“The challenge faced by many Canadians is that their income is relatively stable from month-to-month, but their expenses can vary significantly,” Rick Lunny, president and CEO, Manulife Bank of Canada, explained in a press release. “Access to rainy day savings or a low-cost line of credit are good options to safeguard against these fluctuations. However, if your backup plan is to carry high-interest credit card debt or borrow from a family member – you could be putting undue stress on your finances or relationships.”