Canada’s more affordable cities could see a surge in homebuyers

Thunder Bay, ON tops the list of most affordable cities in Canada, where just under a quarter (22.2%) of household monthly income is required to service a mortgage payment. Saint John, NB, Red Deer, AB, Trois-Rivières, QC and Edmonton, AB round out the top five, with a quarter (25.1%) to just under a third ( 28.9%) of household monthly income needed to service a mortgage payment.

The survey shows Quebec City as the most popular relocation destination among residents of the Greater Montreal Area, where 29% of respondents would move. Meanwhile, Edmonton, AB is the top-ranking choice among respondents in the Greater Toronto Area (19%) and Greater Vancouver Area (19%).

Out of the 15 most affordable cities in Canada, four are in the Atlantic provinces with St. John's, NF ranking number seven in the most affordable cities in Canada — with only 30.1% of household monthly income required to pay mortgage payments.

Overall, 40% of respondents from the country's largest urban centres say they would not move to one of Canada's most affordable cities, with 47% of homeowners and 30% of renters expressing their intention to stay put.

Most affordable Canadian cities: Royal LePage 2024 report

Royal LePage 2024 Most Affordable Canadian Cities Report
Royal LePage 2024 Most Affordable Canadian Cities Report

Read More: Can you afford to buy? Find out how much a mortgage payment will cost you using the Money mortgage calculator

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Regional trends highlights the popularity of Edmonton, AB along with Thunder Bay, ON and St. John's, NL

In the Greater Toronto Area, 51% say they would consider purchasing a home in a more affordable city with Thunder Bay, ON and St. John's, NL taking the top two spots, with 15% and 14%, respectively, considering a move to these regional hot spots.

In Greater Vancouver, 45% of respondents say they would consider living in a different city in order to find a cheaper home. For Greater Vancouver residents the top three spots were: Edmonton, AB, with St. John’s, NL (13%) and Thunder Bay, ON (9%) rounding out the top three list.

Despite the lack of affordable housing in Greater Vancouver, the survey showed a surprising willingness of current residents to stay put. According to the Royal LePage survey, Greater Vancouver had the highest percentage of residents (46%) who'd stay put — compared to 40% of Greater Montreal Area residents and 37% of Greater Toronto Area residents.

Read More: Want to land a better mortgage rate? Here are 4 tips for getting the best mortgage rate in 2024

Find the best mortgage for you

Shopping around for a mortgage is a huge part of buying a home. You want to ensure that you get the best rates and the best terms based on your personal financial needs.

You can choose between a fixed mortgage rate — home loan that carries the same interest rate for its entire term — or a variable mortgage rate — which has an interest rate that changes over the course of the term of the loan. Historically, the former has been more popular with Canadian homeowners than the latter.

If you have an uncapped variable mortgage, you will see your monthly payments increase if interest rates go up, and decrease when interest rates go down. With a capped variable mortgage, your monthly payment will remain the same, but if the prime rate rises, more of your payment will go to interest, delaying the day when you finally pay off the mortgage.

For most home buyers, the question of mortgage affordability boils down to math. To really understand how much mortgage you can afford, buyers need to understand the factors lenders consider when qualifying a mortgage application.

Homewise is a free service that allows you to apply for a mortgage and explore mortgage options. You can also use the helpful calculators to see how much home you can afford and what expenses you should expect from your home purchase. Homewise also offers helpful guides that explain everything you could want to know about the home buying process. Homewise will negotiate with 30 banks and mortgage lenders for you by showing you different mortgage options. Visit Homewise to applying for your mortgage and browse through mortgage options.

Survey methodology

The survey was conducted by Hill & Knowlton using the Leger Opinion online panel. The survey asked 900 Canadian residents, older that age 18, and living in Canada's three largest urban centres: Greater Toronto, Greater Montreal, and Greater Vancouver. The survey was completed between May 13 and 16, 2024. Equal sampling was done within each city, with age and gender quotas. Weighting was applied to reflect the relative sizes of the three cities, according to 2021 census figures. No margin of error can be associated with a non-probability sample (i.e., a web panel in this case). For comparative purposes, a probability sample of 900 respondents would have a margin of error of ±3%, 19 times out of 20.

The Royal LePage's Affordability Factor is based on the percentage of income required to service a monthly mortgage payment, using Statistics Canada 2022 provincial median total income of economic families and persons not in an economic family, and city-level aggregate home price data from the Royal LePage Q1 2024 House Price Survey. The mortgage calculation is based on a three-year fixed-term loan at 5.71%, amortized over 25 years with a 20% down payment.

Sources

1. Royal LePage: Royal LePage 2024 Most Affordable Canadian Cities Report Data Table (2024)

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Nicholas completed his master's in journalism and communications at Western University. Since then, he's worked as a reporter at the Financial Post, Healthing.ca, Sustainable Biz Canada and more. Aside from reporting, he also has experience in web production, social media management, photography and video production. His work can also be found in the Toronto Star, Yahoo Finance Canada, Electric Autonomy Canada and Exclaim among others.

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