Thinking of moving to Toronto or Vancouver? Recent reports on house prices might make you think again. While the housing market seems to have stagnated in many parts of Canada, not so for these two major Canadian cities.
What does $1million buy you in the Canadian housing market?
Where I live: a lakefront mansion
Most of Canada: an extremely comfortable house
Toronto and Vancouver? $1million is the price you’ll pay for the average detached house.
No wonder their many residents are unhappy. Just check out #Don’tHave1Million on Twitter and you’ll get the picture. Frustrations are rising as people are losing out in bidding wars and many house hunters are resigning themselves to becoming long-term renters. And the situation is only expected to get worse.
According to the RBC, a standard two-storey house in Vancouver was selling for $929,000 in January to March of this year. The Canadian average is $455,00. As if this doesn’t sound bad enough, this means that almost 87% of the average household income in the city would be going towards the mortgage, utilities and property taxes. That doesn’t leave you much of a life! Toronto isn’t too far behind: average price of $759,800 and housing costs accounting for 67% of your average income. Lenders typically recommend that not more than 30% of your gross income go towards housing costs.
What does all this mean for new immigrants? With more people unable to buy, that puts more pressure on the rental market in these two cities, making it even harder to find decent rental properties when you first move here. Latest figures back this up showing ever decreasing vacancy rates in Greater Vancouver and Toronto combined with–not surprisingly– the highest rental prices in the country. The average monthly rent for a 2-bedroom unit in Vancouver is now $1345.00, compared to the Canadian average of $949.00.
If you’re looking to get on the Canadian property ladder, you may have some equity to cushion the blow if you’re moving here from Europe and selling your home, but you’ll still need to secure good jobs to feed that mortgage every month.
While it may be tempting to broaden your house search to a wider geographical area and live further out of town, this will likely increase commuting time and impact on your quality of life. Toronto and Vancouver are fantastic in so many ways for new immigrants, but maybe it’s time to look elsewhere and consider Canada’s other large and medium size cities.
As a side note to this, recent reports suggest that the boom out west is finally slowing. Fort McMurray – which at one point couldn’t find enough housing for its huge influx of workers – has seen its unemployment rate double in the last year due to oil sands layoffs. And surprisingly, the unemployment rate in Calgary has recently increased – up 0.5% in July on the previous month. Admittedly this is only one month, but this puts it at a higher unemployment rate than London, Ontario, for the first time in 15 years. Southwestern Ontario has been hit hard recently by manufacturing losses, so it’ll be interesting to see if this is the start of a trend.
Have you been thinking of moving to Toronto or Vancouver? Do these reports make you think differently?