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On paper, the price of homes in Canada looks ridiculous. How do people afford homes? Do they basically slave just to have the title of homeowner, or do they enjoy lower rates or something than Americans that balances it out?
Is there more to the story than home ownership simply being much more realistic and cheap for an American family than for a Canadian family, or is that exactly what the case is?
Would you say the average Canadian can hope to own a home someday, or only say the top 20 percent or people with advanced college degrees? Could Doug and Brenda who work at No Frills ever hope to own their own house, or would they have to rent forever or live in an apartment?
Small town British Columbia, our average house price is sitting around $243,000.00. We are in our early 50's, we own 3 homes. Only one has a mortgage, with an interest rate of 2.20%. Monthly payments are in tune with rent.
Our 3 adult children have just purchased their 1st homes. Like us they bought homes with a rental suite. They live in the suite and rent out the main home.
Would you say the average Canadian can hope to own a home someday, or only say the top 20 percent or people with advanced college degrees? Could Doug and Brenda who work at No Frills ever hope to own their own house, or would they have to rent forever or live in an apartment?
I don't even know what an average Canadian is when it comes to aspirations of home ownership.. Personally I have zero aspirations to own a home and perfectly happy to rent something affordable and invest the rest. Its not about not being able to afford one, its a matter of not wanting to get involved in what is required both financially and otherwise including opportunity costs in being a home owner. I don't have to worry about paying utilities, getting a new furnace or doing roofing repairs or general upkeep and plowing snow in winter - i'm happy to leave those worries to a landlord. Point is, not everyone's ideal is being a homeowner and lifestyle, opportunity costs come into play as much as simply cost.
Are you looking only at prices within the centres of large cities? Then, yes SFH can be expensive...the burbs are cheaper.
Home ownership is actually higher in Canada than the US, so it can't be that bad.
How do mortgage rates etc compare? I've heard they are lower rates generally in Canada, but someone else argued against this for some reason I can't recall. If they are though, it would make sense why a Canadian could afford a half million dollar house while an American couldn't, and could somewhat explain the high cost of housing up there.
How do mortgage rates etc compare? I've heard they are lower rates generally in Canada, but someone else argued against this for some reason I can't recall. If they are though, it would make sense why a Canadian could afford a half million dollar house while an American couldn't, and could somewhat explain the high cost of housing up there.
We just renegotiate and our rate is 2.6%. The home cost $349, four years ago but my wife has near perfect credit and makes 6 figures.
Friend of ours just upsized and paid over $800k for a home. They admitted they are house poor and both will have to take on any overtime if it's available.
Actually, we have 2 sets of friends in that same situation. All four of them (both couples) have great jobs with good pay but still bought too much home.
I don't even know what an average Canadian is when it comes to aspirations of home ownership.. Personally I have zero aspirations to own a home and perfectly happy to rent something affordable and invest the rest. Its not about not being able to afford one, its a matter of not wanting to get involved in what is required both financially and otherwise including opportunity costs in being a home owner. I don't have to worry about paying utilities, getting a new furnace or doing roofing repairs or general upkeep and plowing snow in winter - i'm happy to leave those worries to a landlord. Point is, not everyone's ideal is being a homeowner and lifestyle, opportunity costs come into play as much as simply cost.
I agree. This whole home ownership pride is silly. One rents or buys depending on his chosen lifestyle as well as which makes more financial sense.
The urge to have a single family home sometimes a "detached" one regardless what the cost is even more irrational. These people push the prices higher so they don't get to complain.
Home prices are high in Canada, with Vancouver and inner ring suburbs, and Toronto seeming to lead the pack. As others say, it gets cheaper when one look to rural (non-resort) areas, the Maritimes, Quebec, Ottawa, etc. We live in expensive Victoria, which is probably on par with Portland prices and probably comparable to places like Bellingham across the water.
How do people do it?
First thing to keep in mind is that the Canadian dollar buys about 80% of what an American dollar buys (in purchasing power parity, not exchange rate), and Canadians make more "dollars" on average in many fields. (Minimum wage ranges from about $10.25 - $11.00, just as an example). So to compare apples to apples you can knock 20% off of the Canadian price when comparing to American prices.
As patwagon said, more homes seem to allow or come with "suites" which can be rented for income. These range from "unauthorized" basement suites that might be low-ceilinged and dark, to nice and new. I recall reading that over 40% of Canadian cities allow suites, compared to over 20% of US cities, and they seem to be fairly popular. You might buy a 2 bedroom home with a suite and eventually expand into the full house as family grows.
Second, there are the 'burbs. A 40-5 minute rush hour commute from Victoria gets you a nice house for about 400k ($ Canadian), and if you're willing to go an hour you can know 100k more off that. I recall reading that even in the Toronto 'burbs there are homes in the 300s. Many young families in particular don't want to live in suburbs, of course. (Not to mention the cost of maintaining and feeding one or two cars if your jobs are far!)
Third, many people aren't buying single family homes. Many are buying condos, and the townhome is more and more common in BC, while it is the norm in historic places like Montreal (city proper). Whether you want to spend $500k on a townhome with almost no yard in a suburb of Vancouver is of course up to you!
And of course, like in the coastal US, people are waiting longer to buy.
A few differences I see is that there are far fewer fees tacked onto a mortgage in Canada, and even the realtor commissions seem lower than in the US. And property taxes are quite reasonable in BC - lower than neighbouring Washington, which has no state income tax, and probably lower than Oregon too. Although there is actually a small property transfer tax when you sell an older home, and (this may be hard for Americans) you actually pay sales tax on a new house!
All in all, what I see is that Canada offers fewer "cheap" cities than the US - Vancouver and Toronto are very desirable, other parts of BC have plenty of resort communities, and Alberta and the Prairies have some high prices driven by energy and resource economies. In these places, the prices seem to me to be comparable to coastal US cities (although nothing like New York is my guess). The US on the other hand offers large affordable areas in the midwest and south which are not facing rapid population and economic growth. Thus, the average price in the US is cheaper.
Yes, its a challenge. Many young families - especially those who don't have high paying careers in the private sector a unionized government position - face high housing costs. And many people do want to own a home, despite what some pundits and policy makers might say. I certainly don't think its healthy to create a society where a single-family home or even decently located townhome is just an upper-middle-class or rural thing, but unless we enact some policies (such as allowing smaller lots with more houses, limiting speculation, or perhaps expanding transit and making our 'burbs more attractive), US and Canadian big cities may be headed in that direction.
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