- Of those Canadians who are considering alternative ways to
become homeowners, over half (54 per cent) are Millennials and Gen
Z.
- 15 per cent of Canadians reported they were able to grow their
savings during the pandemic and plan to use these funds as a down
payment on a home in the next six to 12 months.
- Winnipeg and Regina continue to be two of the more
affordable markets in Canada
year-over-year, with an average selling price below $350,000, and St.
John's tops the list this year with an average selling price
at $307,619.
- Forty-five per cent of Canadians agree that a national housing
strategy would improve their ability to own a home.
TORONTO and KELOWNA, BC, July 20,
2021 /CNW/ - According to the RE/MAX 2021 Housing
Affordability Report, one in three (33 per cent) Canadian
homebuyers are exploring alternative options to help them get a
foot into the housing market. These include renting out a portion
of a primary residence (21 per cent), pooling finances with friends
or family to purchase a home (13 per cent) or living with
like-minded neighbours in a co-op/shared living arrangement (seven
per cent).
According to a Leger survey commissioned by RE/MAX, 42 per cent
of Canadians said the high price of real estate was a barrier to
entry into the market. This is up four per cent from last year –
surprising, given the consistent price growth experienced by
housing markets from coast to coast over the past year. Among
prospective homebuyers, millennials and Gen Z are most likely to
consider alternative regions and communities, and/or financing
options to keep affordability in play.
"It's promising to see Canadian buyers deploying their ingenuity
to be able to buy a home, but we must address the urgency of the
underlying affordability problems, which are predominantly
systemic," says Elton Ash, Regional
Executive Vice President, RE/MAX of Western Canada. "While we wait for a
nationally and municipally supported housing strategy based on an
aggressive goal to boost our national inventory of affordable
housing, there are regions across the country, especially in
Western Canada, that remain
accessible to first-time buyers looking to break into the
market."
Key barriers to affordability for many would-be buyers,
according to the Canadian consumer survey, include a shortfall in
salary (26 per cent); the fear of rising interest rates (18 per
cent); the fear of being "house poor" (18 per cent); lack of steady
full-time employment (16 per cent); current levels of household
debt (11 per cent); and the mortgage stress test (11 per cent).
Affordability across Canada
Canada's two largest cities,
Toronto and Vancouver, have struggled with significant
affordability challenges mainly due to low supply and high demand
due to low interest rates. Unsurprisingly, both cities have
remained least affordable year-over-year, according to RE/MAX's
2021 Housing Affordability Report.
In Western Canada on the other
hand, there are some unique outliers when it comes to
affordability. When compared to Vancouver's high-priced market, Calgary and Edmonton have both seen an influx of new and
prospective buyers influenced by the lower priced housing options
offered, as well as appealing liveability factors, such as green
spaces and proximity to employment. Low commercial rental rates
have also helped to diversify the employment sectors in areas like
manufacturing and technology.
The most affordable neighbourhoods in Calgary are Northeast and Southeast Calgary, with entry level homes
beginning at $350,000, and overall
average prices in 2021 ranging from $266,868 - $588,541
depending on property type. In Edmonton, the most affordable area is
Central North where a two-bedroom bungalow with full basement
approximately 900SF would sell between $160,000-$190,000.
The most affordable neighbourhoods (Central North) Alberta Avenue
offer entry level homes beginning at $160,000 and overall average prices between
$175,000-$225,000.
Similarly, in Atlantic Canada,
markets such as St. John's that
have experienced modest average price increases (approx. 6.5 per
cent since 2020) as compared to larger cities like Toronto and Halifax are offering affordable options for
buyers looking to purchase a home without feeling financially
over-extended. Current average sales prices across all property
types in St. John's sit at
$307,619 – far below the average
residential home price in Canada.
Despite an uptick in prices from 2020 to 2021 of approximately
20 per cent ($465,903-$561,701), Ottawa continues to be a good option for
affordability seekers as well, particularly first-time
homebuyers.
Short of exploring alternatives to be able to buy a home, those
who are willing to expand their boundaries can still find "hidden
gem" neighbourhoods with below-average prices across Canada. According to a wider survey of RE/MAX
Canada brokers and agents, some of
the most affordable neighbourhoods include:
- Washington Park, Regina,
Saskatchewan
- New Waterford, Cape Breton, Nova Scotia
- West Flat, Prince Albert,
Saskatchewan
- Bayview, Sault Ste. Marie, Ontario
- Portage La Prairie, Central
Plains, Manitoba
Meanwhile, in what are traditionally considered Canada's most expensive housing markets,
RE/MAX brokers and agents have identified relatively affordable
neighbourhoods that offer homes priced below the city-wide average,
such as:
- New Westminster in
Greater Vancouver, BC
- Penbrooke, Rundle and Dover in Calgary, Alberta
- Regent Park in Toronto,
Ontario
- North End Hamilton,
Ontario
- Hawthorne, Carlton Place and
Vanier in Ottawa, Ontario
View and download the full list of most affordable
neighbourhoods in Canadian cities and towns here:
http://download.remax.ca/PR/2021AffordabilityReportNeighbourhoods.pdf
Interest rate effect
The record-low interest rates that first appeared in 2020 have
been a "double-edged sword," presenting an exceptional opportunity
for Canadians to get into or move up in the housing market, while
also adding fuel to an already hot sector. Yet, with inflationary
pressures starting to emerge, interest rates could rise soon,
putting pressure on over-leveraged homeowners and slowing consumer
demand.
"We've seen many buyers benefiting from low interest rates,
which has created a sense of urgency to get into the market," says
Benjamin Tal, Deputy Chief
Economist, CIBC. "However, we must caution that low rates are
subject to inevitably rise, possibly as soon as 2022. We have to
focus on the impact that this will have on the housing market and
those who have recently purchased at a lower rate, as a
one-per-cent increase would significantly raise the monthly
carrying cost of a home."
Based on broker insights and external data, as seen within the
accompanying RE/MAX Housing Affordability Index, the average
monthly mortgage amount across Canada ranges from approximately $950-$4,268
depending on regional income levels, and a 20 per cent down
payment, amounting to an average percentage of Canadians' monthly
income from 11 per cent to upwards of 50 per cent. This is
currently consistent with the majority of Canadians (72 per cent)
who feel comfortable allocating less than 50 per cent of their
household income towards housing costs, including mortgage
payments.
However, concern over the ability to afford a home in the next
two years due to rising prices remains, with nearly half (48 per
cent) of Canadians sharing this sentiment. This concern
significantly rises for younger Canadians (aged 18 – 34), with 71
per cent expressing concern. Unsurprisingly, over half (60 per
cent) of this group agrees that a national housing strategy would
cool the market and improve affordability.
"Creative solutions to achieve affordable home ownership will
only take us so far, as will 'stop-gap' measures such as the
mortgage stress test," says Christopher
Alexander, Chief Strategy Officer
and Executive Vice-President, RE/MAX of Ontario-Atlantic
Canada. "Without a national and locally supported strategy
to significantly increase housing supply, prices will continue to
rise. It shouldn't be the burden of the next generation of
homebuyers to figure out how to 'get around' the supply
shortage and resulting affordability crisis when there are
feasible, long-term solutions within reach."
Buyer incentives and future affordability
considerations
Amidst market challenges, the continued push behind the
First-Time Home Buyer Incentive (FTHBI) has provided Canadians with
an effective way to access a suitable down payment. Of those who
recently bought their first home, 35 per cent took advantage of the
FTHBI; however, of those who did not, 31 per cent were unaware of
the incentive.
Incentives and regulations put in place to control or entice
demand, while advantageous for some, are thought to not yet address
some of the other affordability challenges that are currently at
play.
"The common means of solving Canada's real estate challenges, such as the
introduction of the stress test, solely addresses demand rather
than finding a way to ensure there are enough homes for all
Canadians. Unfortunately, we still have yet to tackle the real
issue behind housing affordability in Canada, which is supply. We share the RE/MAX
opinion that addressing supply must be our top consideration moving
forward," say Ash and Alexander.
Additional highlights from the 2021 RE/MAX Housing
Affordability Report:
- St. John's, Regina, Winnipeg, Edmonton, Windsor rank as the top more affordable
regions (see index), based on average sale price, monthly household
income, and percentage allocated towards a mortgage
- Those who have been able to afford homeownership (56 per cent
of Canadians) are significantly more likely to be aged 35+ (64 per
cent), live in a rural (70 per cent) or suburban (60 per cent)
area, and earn $80k+ per year (74 per cent).
- Of those who are not able to afford homeownership (41 per cent
of Canadians), they are significantly more likely to be aged 18-34
(60 per cent), live in an urban area (48 per cent), and make less
than $40k per year (70 per
cent).
- When it comes to finding ways to own a home, Gen Z and
Millennials claim that:
-
- 54 per cent would consider buying a home in a different
neighbourhood or region, just to be able to enter the housing
market.
- 53 per cent are only able to own a home with the help of their
parents or other family members.
- 20 per cent claim that owning a home has meant that they've had
to move to another city within their province given affordability
challenges.
- 17 per cent have moved or purchased a home in entirely new
provinces because it was more affordable than their previous place
of residence.
- Canadians in Western Canada
are more likely to want to get creative in their home-buying
efforts (39 per cent), as compared to Ontario and Atlantic Canadians (33 per
cent).
About the 2021 RE/MAX Housing Affordability Report
The 2021 RE/MAX Housing Affordability Report includes data and
insights from RE/MAX brokerages. RE/MAX brokers and agents are
surveyed on market activity and local developments. Average sale
price is reflective of all property types in a region and varies
depending on the region. Regional summaries with additional broker
insights can be found at RE/MAX.ca.
About Leger
Leger is the largest Canadian-owned
full-service market research firm. An online survey of 1,539
Canadians was completed between June 4-6,
2021, using Leger's online panel. Leger's online panel has
approximately 400,000 members nationally and has a retention rate
of 90 per cent. A probability sample of the same size would yield a
margin of error of +/- 2.51 per cent, 19 times out of 20.
About the RE/MAX Network
RE/MAX was founded in 1973
by Dave and Gail Liniger, with
an innovative, entrepreneurial culture affording its agents and
franchisees the flexibility to operate their businesses with great
independence. Nearly 140,000 agents provide RE/MAX a global reach
of more than 110 countries and territories. RE/MAX
is Canada's leading real estate organization with more
than 20,000 Sales Associates and over 900 independently-owned and
operated offices nationwide. RE/MAX, LLC, one of the world's
leading franchisors of real estate brokerage services, is a
subsidiary of RE/MAX Holdings, Inc. (NYSE: RMAX). With a
passion for the communities in which its agents live and work,
RE/MAX is proud to have raised millions of dollars for Children's
Miracle Network Hospitals® and other charities. For more
information about RE/MAX, to search home listings or find an agent
in your community, please visit www.remax.ca.
Forward looking statements
This report includes
"forward-looking statements" within the meaning of the "safe
harbor" provisions of the United States Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be
identified by the use of words such as "believe," "intend,"
"expect," "estimate," "plan," "outlook," "project" and other
similar words and expressions that predict or indicate future
events or trends that are not statements of historical matters.
These forward-looking statements include statements regarding
housing market conditions and the Company's results of operations,
performance and growth. Forward-looking statements should not be
read as guarantees of future performance or results.
Forward-looking statements are based on information available at
the time those statements are made and/or management's good faith
belief as of that time with respect to future events and are
subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in
or suggested by the forward-looking statements. These risks and
uncertainties include (1) the global COVID-19 pandemic, which has
impacted the Company and continues to pose significant and
widespread risks to the Company's business, the Company's ability
to successfully close the anticipated reacquisition and to
integrate the reacquired regions into its business, (3) changes in
the real estate market or interest rates and availability of
financing, (4) changes in business and economic activity in
general, (5) the Company's ability to attract and retain quality
franchisees, (6) the Company's franchisees' ability to recruit and
retain real estate agents and mortgage loan originators, (7)
changes in laws and regulations, (8) the Company's ability to
enhance, market, and protect the RE/MAX and Motto Mortgage brands,
(9) the Company's ability to implement its technology initiatives,
and (10) fluctuations in foreign currency exchange rates, and those
risks and uncertainties described in the sections entitled "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the most recent Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q filed with
the Securities and Exchange Commission ("SEC") and similar
disclosures in subsequent periodic and current reports filed with
the SEC, which are available on the investor relations page of the
Company's website at www.remax.com and on the SEC website at
www.sec.gov. Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date on
which they are made. Except as required by law, the Company does
not intend, and undertakes no duty, to update this information to
reflect future events or circumstances.
SOURCE RE/MAX Canada