Calgary among most affordable real estate markets in Canada

Monday, October 7, 2019   /   by Sergey Korostensky

Calgary among most affordable real estate markets in Canada

Calgary’s benchmark price for a home puts the city among the most affordable real estate markets in Canada, a new study shows.

Realty firm Zoocasa conducted an analysis of median incomes across 15 major markets in Canada, comparing them with the benchmark home price in each city.

“We calculated what the maximum mortgage amount would be for somebody who has a median income in that city,” says Penelope Graham, managing editor for Zoocasa.

“Then we compared that maximum mortgage amount to the benchmark home price in that city to see if it would be sufficiently large enough to purchase.”

Overall, eight cities were deemed affordable, meaning individuals would qualify for a mortgage covering most of the cost and be able to save for a down payment in less than a decade. Regina was deemed most affordable, followed by Saskatoon, Winnipeg, Halifax-Dartmouth and Edmonton.

Calgary ranked sixth with benchmark home price of $420,500, and a median household income before taxes of $99,583.
This would qualify the median buyer for a $415,454 mortgage. If that buyer saved 20 per cent of household income, it would take a year to save five per cent of the home price for a down payment, about $21,000.

Edmonton ranked just ahead of Calgary with $321,300 benchmark price and a median income of $94,447. “Based on that, you would quality for a maximum mortgage amount of $317,344,” Graham says.

Again, it would take a would-be buyer about a year to save for a down payment of about $16,000.

“That is very feasible for many homebuyers,” Graham says about both cities.

While the majority of cities surveyed are considered affordable, seven were not.

These include Greater Vancouver, Greater Toronto, Victoria, Fraser Valley, Hamilton-Burlington, Kitchener-Waterloo and London and St. Thomas.

“This is where we get into the median household income and what you would need to purchase the benchmark home price having a disparity between the two that is getting really, really wide,” she says.

Greater Vancouver topped the list as the least affordable market. The benchmark price there is $993,300.

“And then the median income in Greater Vancouver is actually lower than in some of the prairie provinces,” Graham says, adding it is $72,652.

That means individuals with this income can only qualify for a $241,994 mortgage.

“If you were going to complete this deal, you would have to come up with $751,306 as the down payment.”

Graham adds that is 76 per cent of the entire home price.

“Obviously that’s not a realistic scenario for a home buyer.”

Based on saving 20 per cent of income a year for a five per cent down payment, it would take the average buyer there 52 years to buy the benchmark price home (a figure which removes the most and least expensive options).

In Fraser Valley, the second least affordable market, buyers would need to save for 42 years. And in Greater Toronto, it would take buyers 32 years to save.

Overall, the benchmark price average across all cities was $627,400 with a median income of $70,336, qualifying for a mortgage of $280,703. That’s enough to cover 55 per cent of the price, which means the median buyer would have to save 20 per cent of pre-tax income for 25 years for a five per cent down payment.