Your Guide to the Canadian Housing Market

Give Me the Bullets

• The average home in Canada now costs $587,461
• Prices have jumped 12% year over year
• Low rates and hot markets are driving the madness
• The government is taking action to cool things down

The Basics

What a year for Canadian housing. Prices continue to spike in a couple of big markets (we’re looking at you, Toronto and Vancouver), while the average cost of a home in Canada is up 11.68% year over year. However, it’s all relative: Ottawa and Montreal prices have risen less than 1% (averaging around $330,000 each) compared to 24% in Vancouver and 16% in Toronto.

Give Me Some Historical Context

Sure thing. We are looking at an unprecedented growth in housing. Mortgage interest rates are at a historic low—really, rates have never been lower. People are getting five-year fixed mortgages at around 2.5%, but in the 1980s, rates were as high as 21%.
See rates from 1935 to today on RateHub.
(And, not to crush your heart, but the average price of a home in 1982 was a mere $72,500.)

Why Are Interest Rates So Low?

Low interest rates can help stimulate our economy, which is what the government has been trying to do since that stubborn recession in 2008. Here’s an example of why that’s a good thing: If it’s cheap to borrow money, it’s simpler (and less risky) for a Canadian tech start-up to hire and expand. Would you rather hit up the bank for $1M when rates are 3% or 20%?

How Do Low Rates Affect Home-Buying?

Low interest rates make it easier to borrow for a home—but at the same time, Canadians have record-high debt loads. Because of this, the government introduced some new mortgage rules in October 2016, including a “stress test.” Basically, this means that if you need mortgage insurance, you need to prove you would still be able to afford your loan if interest rates go up.
The result? Many first-time homebuyers will be approved for smaller loans.
For more details: CBC and the Department of Finance

LET’S TALK HOUSING PRICES.

WHAT DOES $500,000 GET ME?

As we mentioned, the average price of a house in Canada is $587,461. If you were shopping with that kind of budget, you might get a really nice one-bedroom condo in Toronto, a detached house in Ottawa, a mansion in Moncton, or a broom closet in Vancouver. (We kid. Kind of.)
Tip: Of course, it’s all a little easier if you borrow $500,000 from your parents—like this couple
profiled in Toronto Life.

OK, What the Heck is Going on in Toronto & Vancouver?

People love living in the city. Low mortgage rates make it easy to borrow money. And there are only so many homes to go around when you’ve got limited land. In Toronto, the average price is now $671,929, while in Vancouver it’s up to $811,986. Both are running low on inventory and, on the west coast especially, foreign investors are using housing as a quick way to turn a profit. Because of this, the government introduced a new mortgage rule in October 2016 around primary residency. It’s meant to make sure foreign buyers who buy houses as investments (and not primary residences) pay taxes.
More details: CBC

Any Cities Where Housing is Reasonable?

Well, we mentioned that possible mansion in Moncton. But really—Halifax is among the more affordable metropolitan cities in Canada. The markets in Montreal and Ottawa are pretty chill, and the Calgary and Edmonton markets have slowed: Calgary home prices are down 4.88% year over year (the average home now goes for $484,352), while Edmonton is down 0.71% (and the average home is $376,245).

Where Did You Get These Stats?

Good question. The Globe and Mail put together a robust House Price Data Centre—and we pulled average prices and YOY change in October 2016. It uses data from Teranet to pull the average price and growth in 11 major metro areas—as well as neighbourhood prices in six major cities. It’s updated every month (our data reflects October), so check the Globe for the latest.

This is All Too Much For Me. Is it OK to Rent?

It most certainly is—not everyone needs to own a home. But you should know that the hot real estate market is also driving up the cost of rent in big cities. For example, rent on a one-bedroom apartment in Toronto is up 5% year over year. Get more details.

Will Prices Ever Go Down Again?

Who knows—trying to predict real estate is not a good idea.

More Details

For calculators and your home search:
CREA | Realtor | RateHub

Explainers & fun reads:
Columnist Rob Carrick | Toronto Life’s The Chase | House Price Data Centre