What makes a city livable?
More than 30 factors related to education, culture, the environment, health care, infrastructure and stability were analyzed. The index’s authors also explained that top cities were chosen by how they rebounded from the pandemic in addition to factoring in stability, good infrastructure and services and enjoyable leisure activities.
While Mexico is a North American country, it isn’t included in EIU’s North American index.
“Western European and Canadian cities dominate the top of our rankings,” the report said, citing how everyday life is “almost back to normal in these cities” after achieving high COVID-19 vaccination rates and ending lockdowns.
High ranking in spite of the housing affordability problem?
When publishing our report for the five best Canadian cities for housing affordability and job growth, none of the EIU’s picks made the list.
While the large urban hubs — like Vancouver, Toronto, and Montreal — offer the most lucrative jobs and career options, they also have some of the most expensive real estate in the nation.
Canadians know this, and some are willing to make sacrifices to find affordable housing.
A July 20 Leger survey, commissioned by RE/MAX, revealed that about 64% of Canadians list relocation among the top sacrifices they’d be willing to make to buy affordable homes.
The online survey polled 1,529 Canadians between June 24-26, 2022.
The survey also found that 43% said the high price of real estate in their area was a barrier to entry into the market. Other hurdles include a higher cost of living (35%); a shortfall in salary (24%); market volatility (24%), and rising interest rates (24%).
This explains why the federal government is providing $1.5 billion to extend the Rapid Housing Initiative and create at least 6,000 additional affordable housing units across Canada.
Is there hope with Calgary and Montreal?
When looking at benchmark real estate prices, both Calgary and Montreal are significantly more affordable when compared to Toronto and Vancouver, where prices for a detached home start at around a million.
In Montreal, the average home sold price reached $576,760 in July after a 6% annual increase. The highly-coveted detached homes for Canadian families saw their prices increase by 10% year-over-year to reach $550,000 in Montreal, and a median condo's average price increased by 9% year-over-year to $392,000.
So how about income? According to Statistics Canada, the average income in Montreal for 2020 is $49,600. This is lower than Canada’s national average, of $51,300 in 2020.
Calgary’s benchmark price of real estate reached $581,600 in July, going up 13% higher than levels reported last year. Detached homes in Calgary rose by 9% year-over-year to reach about $637,000 in July, and condos went up 6% to hit $275,000.
Calgary’s average income, meanwhile, is above the national average at $58,500 in 2020.
The issue of income vs housing prices
Vancouver’s benchmark price for detached homes is more than $2 million, representing a 13.4% increase from June 2021. Condo prices in Vancouver rose by 11.4% from July last year to hit a benchmark price of $755,000.
With Vancouver’s real estate market being so expensive, one would expect the average income to be higher or even higher than Calgary’s, right?
Not exactly. According to Statistics Canada, the average income in Vancouver equals the national average at $52,600.
For Toronto, the average selling price is about $1.5 million, which remained 5.3% above the June 2021 level. The Greater Toronto Area’s prices for detached homes in July averaged about $1.4 million, semi-detached were about $1 million, and condo apartments were about $719,237.
Toronto’s average income too isn’t that much higher than the national average. For 2020, Torontians on average earned $52,700.
For many Canadians, seeing their country’s home prices outgrowing its income isn’t breaking news.
While all G7 countries have seen their house price-to-income ratio rise over the past year, Canada has one of the highest house price-to-income ratios out of 38 developed countries, according to the latest index from the Organisation for Economic Co-operation and Development.
In the fourth quarter of 2021, the ratio index reached a whopping 141.9, meaning, home prices surged at a rate 41.9% faster than incomes since 2015, OECD’s data showed. Meanwhile, the U.S. ratio index was 130.5 in Q4 2021.
What makes Toronto and Vancouver so expensive?
Last year, Ontario received half of all the newcomers to Canada, with the majority aiming to settle in Toronto where all the lucrative job opportunities are.
Known for its picturesque beauty, metro Vancouver also attracts lots of immigrants. It is expected that population growth in British Columbia will once again be driven by immigration this year, when it will welcome a record of more than 70,000 permanent residents.
“Our region continues to grow because we attract people and businesses from all around the world,” said Toronto Regional Real Estate Board CEO John DiMichele in July.
DiMichele also urged policymakers at all levels to build more homes as “housing demand” will “remain strong over the long term.”
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