National Housing Sentiments Survey

84% of Canadians Feel Housing Affordability is a Major Issue: National Survey

By: Zoocasa

As the federal election approaches, one of the key issues in every major party’s platform is national housing affordability. Among policymakers, issues such as whether or not Canadians can practically purchase a home within their local housing market, find affordable rentals, or qualify for a mortgage, are contentious. A recent survey conducted by Zoocasa demonstrates that these are issues which resonate with prospective buyers, homeowners and tenants.

Zoocasa polled over 1,300 Canadians between September 17 to 29, 2019, to better understand their sentiments regarding the following housing issues:

  • Reduction of home affordability
  • How homeowners are being impacted by increasing home prices
  • Financial stress and housing prices
  • The most prevalent challenges for home buyers
  • Housing unaffordability as a federal election issue

Homeownership Still Considered of Importance

Findings demonstrate that respondents feel quite strongly that the cost of housing is a significant issue, with 84% in agreement. There is also a lot of conversation surrounding the subject matter with 72% of respondents saying that they had a conversation with a friend, family member or colleague about housing or the real estate market with the last week.

Although there are a number of challenges that exist, homeownership is still viewed as an important milestone that many believe should be achieved early on in adulthood, as 31% of respondents feel as though people should own a home or property by the time, they are between 31 – 35 years old. 29% of respondents feel as though this milestone should be met even earlier, at around 26-30 years old.

The Climbing Cost of Home Ownership

 The dramatic increase in housing prices over the last decade is one of the key drivers of housing unaffordability, particularly within Canada’s largest urban centres, where prices have outpaced both inflation and the growth of wages. An example of this are Vancouver houses for sale, where the CREA benchmark home price in September 2019 was $990,600;[ZR1] not feasible for a household earning $72,662, the median income within the region.

This is quite evident to respondents as 91% say that they felt the cost of buying a home in their city or town has been rising faster than their incomes, and 92% feel as though rising home prices have made it hard for middle-class Canadians to buy their first home.

This encourages a “drive until you qualify” strategy among buyers as 52% of all first-time buyers say they’d consider moving to another town or city in order to be able to afford a home. This may force buyers to look at more affordable markets like Ottawa or Calgary homes for sale.

Real Estate Costs’ Impact on Homeowners

While the middle class has faced a number of challenges trying to get into the housing market as a result of rising home prices, this increase has been beneficial for some -particularly current homeowners. Of the respondents who identify as homeowners, 69% agree that owning a home has been effective in helping them build wealth.

Yet there is still a large amount of anxiety among homeowners as 54% of these respondents say that their housing costs have increased faster than their income since they purchased their home.

Much more revealing is that more than half of homeowners felt as though making their home purchase in earlier years was largely beneficial, as 66% said that that they felt they may not be able to afford the home they currently live in if they had to buy it in today’s market conditions.

The Pressure of Finances and Housing

The cost of housing has negatively impacted Canadians by not only causing them financial stress but by taking a toll on their mental health as well. This is particularly prominent amongst renters, with 76% of them saying that the rising home costs have negatively impacted their mental health at least once, compared to 50% of homeowners.

All respondents appeared to be experiencing a large degree of financial stress as 79% said they were their biggest source of stress at least once over the last 12 months, with 75% of homeowners and 86% of renters in agreement.

Challenges for First Time Buyers

Although 70% of first-time buyers believe that the greatest obstacle to buying a home is rising real estate prices, that is only part of it. The other top obstacles to homeownership are having enough income (64%) and saving for a down payment (58%).

Housing Affordability: A Federal Election Issue

Canadians want their federal government to make their housing concerns an area of focus, as 78% of respondents indicated that it’s important the next federal government elected makes it a priority. Renters felt the strongest with 90% in agreement, however, 72% of homeowners also felt that this was an area of note.

Click here to check out the full survey findings.

Ontario Real Estate

Ontario Real Estate Largely Unaffordable for Median Income Buyers: Study

By: Zoocasa

Homeownership in Ontario cities is largely out of reach for households making the median income, with the only exception being Ottawa, according to a recently released report by Zoocasa.

The study assessed 15 Canadian cities to see how affordable it would be for the median-income household to purchase a property. The numbers reveal that buyers making the median income would have to save up massive down payments in order to qualify for a mortgage to buy Ontario real estate.

The calculations assume a mortgage rate of 3% over 25 years, with 1% of the purchase price devoted to property taxes and another $100 a month toward heating, and assumed buyers could save 20% of their income annually.

Toronto Among Least Affordable for Median-Income Buyers

Toronto was, unsurprisingly, the most unaffordable city in the province. There, a median-income household would only qualify for a mortgage of $300,174. But with average property prices at $802,400, such buyers would need to make up the difference with a 63% down payment of $502,226. That down payment would take a full 32 years to save, based on stashing away 20% of the median income of $78,373.

 Even Smaller Secondary Markets Out of Reach Financially

Hamilton and Kitchener, smaller urban centres in the province, were no better. Houses for sale in Hamilton are at an average of $613,900 while household incomes are only $74,464. That means buyers would only qualify for a mortgage of $310,732, leaving them on the hook for 49% of the purchase price to be paid in cash. That would take the median family 20 years to save up — unaffordable and unrealistic by any measure.

Similarly, houses for sale in Kitchener are slightly lower at $528,990 while incomes are slightly higher at $77,229. But it would still take 13 years to save up a big enough down payment. While 13 years is certainly better than 32 years, it’s not affordable — by the time a household had saved up enough funds, the market would have risen far, far beyond their reach. It’s a game of catch up that buyers just can’t win.

Ottawa, Prairies, Remain Feasible for Median-Income Buyers

In contrast, Ottawa remains affordable. In the capital city, home prices are just under $500,000 and salaries are high, at $86,451. Borrowers would qualify for a mortgage of $396639 and would only have to put forth an 11% down payment of $46,887, which would take a reasonable three years to save.

While Ontario remains out of reach for most, it’s a completely different story in the prairies, where homes are extremely affordable. In all prairie cities examined it would take a single year to save up an adequate down payment.

Want to see the full ranking of cities on this list? Check out the infographic below.

canada-down-payment-required-zoocasa

Zoocasa is a full-service brokerage that offers advanced online search tools to empower Canadians with the data and expertise they need to make more successful real estate decisions. View real estate listings at zoocasa.com or download our free iOS app.

TREB August Report

Heating August Market Raises Concerns: TREB

By: Zoocasa

In August, sales and prices across the GTA continued to increase. This suggests that the efforts to cool the region’s housing market have been absorbed, allowing for the potential reoccurrence of overheating within the market.

The latest numbers reported by TREB show that a total of 7,711 homes changed hands over the course of the month, at an increase of 13.4% year over year. Market conditions steepened and pressure was placed on both buyers and home values as a result of a -3% decline in supply. There was a 3.6% increase in the average price year over year to $792,611. As well on the MLS Home Price Index, a tool utilized to measure the overall value of homes sold, 4.9% growth was documented. 

A Continued Increase in Demand

In comparison to the record-breaking numbers seen in 2016 and 2017, current market conditions are more tempered. However, buyer demand is returning, particularly for higher priced single-family homes as highlighted by TREB President Michael Collins. The renewed increase for demand in the single-family home sector follows the significant hit it experienced from the Ontario Fair Housing Plan and OSFI mortgage stress test. Growth in the prices for condos for sale in Toronto leads the market. Toronto townhouses and other high-density low-rise homes follow condos in regard to their price growth.

“GTA-wide sales were up on a year-over-year basis for all major market segments, with annual rates of sales growth strongest for low-rise home types including detached houses. This reflects the fact that demand for more expensive home types was very low in 2018 and has rebounded to a certain degree in 2019, albeit not back to the record levels experienced in 2016 and the first quarter of 2017,” he stated. “The OSFI mortgage stress test continues to keep some would-be home buyers on the sidelines.”

 Lack of Supply Creates Concern over Rising Prices

There is cause for concern that prices may rise dramatically, in a manner similar to that of the rise of 2016-2017, as a result of the lack of the supply in the market as well as the lack of new housing creation. TREB notes that there is increasing pressure being put onto home buyers as the number of year-to-date sales has significantly outgrown the supply of new listings.

Within the City of Toronto, there has been a 5.1% increase in the number of homes which changed hands in August, a total of 2,553 homes. The number of new listings remained relatively unchanged in the 416, with a slight downward shift of -0.6%. The average home price increased 4.2% to $818,715. The City of Toronto has a 68% SNLR overall.

“This year’s market through August has been characterized by receding listings and increasing sales relative to 2018,” stated Jason Mercer, TREB’s chief market analyst. “Competition between buyers has increased, which has led to stronger annual rates of price growth, most notably during this past spring and summer. Right now, the overall pace of price growth is moderate. However, if demand for ownership housing continues to increase relative to the supply of listings, the annual rate of price growth will accelerate further.”

He adds, “This underpins the importance of solving this region’s housing supply issues, which will go a long way to ensuring a sustainable pace of price growth over the long term.”

Take a look at the infographics below to see the August year-over-year changes in sales and price trends for the City of Toronto and TREB area:

toronto-home-sales-prices-aug-2019

treb-home-sales-prices-aug-2019

Doubled home prices in Toronto

Areas Where Home Prices Have Doubled Over 5 Years – City of Toronto

By: Zoocasa

The Toronto real estate market has experienced substantial changes over recent years. Factors including robust economic activity, heavy migration, investment in real estate, and low rental vacancy have put upward pressure on home prices. According to a report from the Toronto Real Estate Board (TREB), the average home buyer would need to pay $256,055 more for a home in July 2019 compared to 2014, an increase of 46% and a price of $806,755.

Additionally, despite federal policies put in place to cool the market, recent data from Zoocasa shows that dramatic price increases have persisted in segments throughout the city.

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TREB July 2019

GTA Home Sales Jump in July as Supply Falls: TREB

By: Zoocasa

The GTA housing market experienced robust activity in July, as more prospective home buyers tapped into the market while new listings declined compared to July 2018.

The Toronto Real Estate Board (TREB) reported a total of 8,595 transactions over the course of July, marking a 24.3% year-over-year increase. Meanwhile, the number of new listings brought to market increased by a mere 3.7%. Buyers now find themselves on the edge of a sellers’ market, with a sales-to-new-listings ratio (SNLR) of 59%. This ratio, which measures the level of competition in a given market, is up by 10% from July 2018. This shows that there is an expanding supply and demand gap resulting in a 3.2% increase in average home prices, now reported at $806,755.

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Toronto Property Tax

What Are The Highest and Lowest Property Tax Rates in Ontario?

By: Zoocasa

Windsor residents pay the highest property tax rate in Ontario, according to a new report by Zoocasa, an online real estate brokerage.

Zoocasa ranked 35 cities in the province based on publicly available tax rate information, and found that Windsor, a small city in southwestern Ontario right beside the Detroit border with a population of just 233,800, pays at a rate around 1.79%.
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FTHBI in Toronto

Could the FTHBI Be Used in Toronto?

By: Zoocasa

Housing prices in major Canadian cities have skyrocketed in recent years. First-time home buyers have found it increasingly challenging to get a foothold on the property ladder.

Sold house prices in Toronto have climbed to an incredible $1.3 million. An alternative used to be for first-time buyers to purchase a smaller, less expensive property type, such as an apartment. But now even that option is increasingly out of reach for most. Condos for sale in downtown Toronto now go for over $600,000 and in some popular neighbourhoods, like Liberty Village condos for sale, units are going for over $700,000. The situation is similar in the Vancouver market.
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Toronto's Skyline

Home Sales Soar while New Listings Remain Flat: June TREB Report

By: Zoocasa

The GTA real estate market continued to experience supply and demand issues throughout June. Home sales surged while new listings brought to market remained stagnant, despite market-cooling efforts put into place in recent years.

Numbers from the Toronto Real Estate Board documented a total of 8,860 transactions in June, marking a considerable 10.4% year-over-year increase. New listings, however, were virtually unchanged, with 15,816 homes brought to market – a dip of just 0.3%.
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May 2019 TREB

Home Sales Up by Almost 20% During May: TREB

For the second month in a row, the Greater Toronto Area experienced double-digit growth in home sales. A total of 9,989 homes were bought, which was an increase of 18.9% from the same time in 2018. Further, sales increased by approximately 10% from the previous month.

While the increase in sales looks promising for Toronto’s real estate market, it is important to note that sales are still below the 10-year trend for the month, which is usually over 10,000 homes sold.
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OFHP Scholarhood

2 Years Later, York Region Hardest Hit by Fair Housing Plan

By: Zoocasa

York Region was hit hardest by the Ontario Fair Housing Plan introduced two years ago, reports Zoocasa, while Windsor and London home prices have grown substantially.

Those are just a few of the findings the online brokerage discovered when they examined how the 16 measures introduced by the former Liberal provincial government affected the province’s housing market.

The measures included a 15-per-cent foreign buyer tax for non-residents, rent controls for new builds and incentives for developers.
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