How much income do buyers need to afford a home in Canada's major cities?

"Homes are becoming more affordable across the country"

How much income do buyers need to afford a home in Canada's major cities?

Buyers now need less income to qualify for the average home than they did over the summer as prices across Canada’s major cities declined in the month of October.

This is according to a new report from mortgage brokerage Ratehub.ca, which analysed real estate data on 10 different cities and compared it with figures from June and August.

“Homes are becoming more affordable across the country,” said James Laird, co-CEO of Ratehub.ca and president of mortgage lender Canwise. “With the Bank of Canada suggesting that rate hikes are nearing an end and the continued softening of home prices, affordability should continue to improve in the coming months.”

Average home prices dropped across all 10 cities included in the Ratehub.ca report. With prices down, the income required to afford a home in these cities also declined.

Victoria saw the largest drop in required income and average home prices. With a stress test rate of 7.44% and a mortgage rate of 5.44%, Victoria homebuyers would need to make $178,890 to afford an average-priced home of $915,300. This is $4,810 below the income required in August.

Required income also dropped significantly in Halifax. Homebuyers there would need an annual income of $101,750 to afford the average home price of $484,000, down $3,780 from August.

Vancouver remained the most expensive city in the list, with homebuyers needing an income of $220,700 to afford an average home worth $1.15 million. Despite the steep price, this is still $3,150 below the income required last August.

Winnipeg, meanwhile, had the most affordable homes, with homebuyers needing to make $75,300 to afford the average home price of $337,400.

“It is likely that June 2022 will prove to be the low point for affordability, since mortgage rates were up while home prices had not yet softened significantly,” added Laird. “As affordability continues to improve, we will likely see homebuyers resume their search in the new year. We will have to see if sellers are interested in listing their homes at values that are significantly lower than their peak.”