Purchasing a home in any Canadian housing market can be a challenge, more so if you’re doing it with one income. There are, however, some cities where it is easier to climb up the property ladder if there is only one source of household income.
Having a dual-income household can greatly improve your purchasing power and ability to qualify for a mortgage, but that’s not to say homeownership is impossible for single-income households. We’ve crunched the numbers of different markets across the country to find the regions where single-income buyers are more likely to be able to secure a home and the types of properties that are most affordable.
The average and benchmark home prices were sourced from the Canadian Real Estate Association (CREA) and regional real estate boards to determine which markets were the most affordable. To determine the minimum income required to qualify for a mortgage on the average home, we assumed the buyer would make a 20% down payment and receive a mortgage with the current average interest rate of 5.14% amortized over 30 years. Those findings were then compared to median income data of “persons living alone who earned employment income” as reported by Statistics Canada in their latest available census data from 2020.
There are still options for single-income buyers in Canada’s housing market
Home prices rose dramatically in the wake of the pandemic, so options for single-income home buyers look a little more sparse since our previous report in 2019, but there are still options. While household budgets are stretched thinner with rising inflation, this analysis compares qualifying mortgage amounts versus regional income levels. Regina takes the top spot out of the 20 selected cities for the greatest affordability. A buyer earning the median income of $58,000 would qualify for the purchase of an average-priced home in this Saskatchewan capital. The average price of a home here is $322,800, significantly below the national average. Buyers in St. John’s earning the median income of $55,200 could also afford to buy an average-priced home in this area costing $315,200. Lethbridge, Saint John, and Edmonton are three other areas where single-income buyers can potentially afford an average-priced home.
Perhaps unsurprisingly, buying in Ontario’s Golden Horseshoe and British Columbia is a more difficult prospect with a minimum down payment. A single-income household in Toronto earning the median income of $64,000 would be $132,875 short of the qualifying amount on the average home priced at $1,210,600. Vancouver is a similar story, with an average home price of $1,223,780, buyers would be $139,013 out of range if earning the median of $56,400. Other markets that may be out of the range for single-income buyers include Victoria, Guelph, Hamilton, Ottawa, and Montréal.
Some property types are more affordable for single-income earners
As part of our research, we broke down different housing types by price to see what kind of home provides greater affordability. For single-income buyers, condo apartments are the most affordable option across the board, with seven different regions having lower benchmark prices than the maximum affordability in those areas. Detached home types are difficult to purchase for single-income households, with minimum down payments. However, townhouses are more affordable in Edmonton, St John’s, Lethbridge, and Regina if you’re looking for a condo alternative.
Overall, anyone looking to purchase a condo apartment in Edmonton can expect the greatest affordability. The least affordable property type is detached homes in Vancouver, with a steep benchmark price of $2,057,200 versus the median income of $56,400.
Check out the infographic below to see which Canadian housing markets and property types are the most affordable for single-income buyers:
Methodology
Income gap: The income gap is calculated as the difference between the median total income for persons living alone who earned employment income, and the income required to purchase the average home.
Home prices: July 2022 average and benchmark home prices were sourced from the Canadian Real Estate Association (CREA) and regional real estate boards where required. The most recently available price at the time of research was used.
Income required: The income required to afford the average home price was calculated using the Ratehub mortgage affordability calculator (www.ratehub.ca/mortgage-affordability-calculator) assuming a 20% down payment, a mortgage rate of 5.14%, and a 30-year amortization. Calculations do not factor in carrying costs such as property taxes and heating.
Median total income of persons living alone by region: The median total income of persons living alone who earned employment income by census metropolitan area or census agglomerations, by age group, was sourced from Statistics Canada, 2021 census reporting on 2020 statistics.
