5 Canada Housing Issues That an Immigrant Should Know

So, you’ve decided to move to Canada.  The next biggest decision would be “Which area in Canada would you call home?”.  This article lays out 5 Canada housing issues that will help you choose where to settle in your new country.

With the current Canada housing issues, inflation, and employment scenarios, the decision to settle in a certain area requires a lot of thought.  Your desired lifestyle, availability of jobs, and other factors should be considered in the decision-making.  However, this article focuses on solely financial considerations to help choose the best area for you.

Canada housing
Residential and Commercial Spaces in Yaletown, Vancouver

Lack of Affordable Rental Housing

The fierce demand for affordable rental housing is driving prices higher at an unprecedented speed.

A report published by RBC in March 2023 highlights the following:

  • In 2022, the growth in purpose-built rental housing in Canada was pegged at 2.4%, its fastest growth since 2014. 
  • This rapid growth was not enough to accommodate the high immigration levels as vacancy rates plunged to their lowest point in 21 years.  With Canada’s record immigration targets, demand for affordable rental housing is seen to drive rent increases continuously. 
  • The report also indicates that without a significant increase in rental stock, the deficit in rental housing could exceed 120, 000 by 2026. This is four times the current deficit.

So how much should you expect to spend on rentals?

Residential and Commercial Spaces in Yaletown, Vancouver
A View of False Creek and Yaletown, Vancouver

Prohibitive Rental Costs

The May 2023 Rent Report published by Rentals.ca states that the average asking rent in April remained above $2, 000 throughout Canada.  Further, the report mentions that the average value shows an increase of 9.6% year over year from April 2022.

Here are key indicators in some of the biggest cities across Canada from the report.

Average Rents in the Biggest Cities Across Canada

It is worth mentioning that cities or areas in the top 15 of the May 2023 national rent rankings are all located in Ontario and British Columbia.

The report states a continuing trend of an elevated annual rate of rent growth due to unprecedented high population growth and low homeownership affordability.  This matches the statements from RBC’s report summarized above.

How much would you need to buy a house in Canada?

View from Homes in Yaletown, Vancouver, British Columbia
View from Homes in Yaletown, Vancouver, British Columbia

Sky-high Real Estate Prices

The rapid increase in home prices took a different turn with the decrease in average home prices in Canada from $794, 957 in March 2022 to $686, 371 in March 2023 according to The Canadian Real Estate Association.  However, Canadian real estate prices are still prohibitive to varying degrees across provinces.

WOWA.ca shares the following Canada housing market information for April 2023:

Average Housing Prices in the Biggest Cities Across Canada
Average House Prices in the Biggest Cities Across Canada

Based on this table, Greater Vancouver Area tops the list of most expensive real estate prices followed by the Greater Toronto Area.  Also, the average price of a condo unit in the Vancouver area costs more than the average single detached home in all other areas mentioned except in GTA, Ontario.

How much should you make to afford a house in Canada?

Income Requirements

An article published by Nesto Mortgage Experts states that:

  • To purchase a home in Canada with a 20% downpayment, the income required to buy an average-priced home ranges between $143, 000 to $159, 000.
  • To purchase a home in Canada with a 10% downpayment, the income required to purchase an average-priced home increases to $146, 000 to $160, 000.
  • The combined gross annual household income needed to purchase an average home spans a wide spectrum starting from $56, 000 in Newfoundland to $241, 000 in Vancouver.

These values are beyond reasonable reach in light of the average income stated by WOWA.ca and the minimum wage published by the Government of Canada as of May 2023.

Average Income and Minimum Wage in the Biggest Cities Across Canada

What other financial considerations should you prepare for?

Other Financial Considerations

Regular Canadians apply for a mortgage and it seems that they promise to pay for the loan until they retire.  According to the Canada Mortgage and Housing Corporation, mortgage professionals look at other financial considerations to determine your eligibility for a mortgage and the mortgage amount that they will lend you:

  • Housing cost ≤ 32% of your gross income

Housing costs = mortgage principal and interest, taxes, and heating expenses

  • Total debt ≤ 40% of your gross income

Total debt = housing, cars, and credit cards 

Tools such as Affordability Calculator and Mortgage Calculator can estimate how much mortgage you will qualify for. 

Residential Building Close to English Bay, Vancouver, BC

Canada is absolutely amazing, but it is not without flaws.  Canada’s housing issues are one of its major flaws.

A comfortable place to live is one of the determinants of our happiness as immigrants.  I hope that this article helps you create a happy life in Canada.

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