Edmonton leads major cities for housing affordability

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Edmonton’s housing market once again shows that it is the most affordable in Canada, with a new study showing that it is affordable in more than one way. The report from Ratessdotca compares median income to the income required to obtain an average price housing mortgage under a federal stress test, which is two percentage points higher than the interest rate offered.

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Edmonton has performed well in six cities, even at the national average, said Victor Tran, a mortgage and real estate expert at Ratesdotca.

“These numbers actually look better because when we run these numbers, they are based on higher mortgage rates.”

The study used five years, with a 4.7% interest rate on fixed mortgages, and its remaining price fell by 5% while the minimum price of the remaining price was 50%, which is the minimum eligibility to obtain mortgage insurance from providers such as Canadian mortgages and housing companies.

In this study, buyers in Edmonton will have more than $50,000 in mortgage eligibility for annual revenues of more than $50,000. The average price of a home is $397,400, and the household income required for a mortgage is $91,000. But Edmonton’s median income exceeded $141,600.

Today, the interest rate for five-year fixed mortgages is below 4%, strengthening Edmonton’s purchasing power. Tran said lower borrowing costs could be more mitigated in the most expensive cities in the United States.

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“Many young people, even those in their 30s, have given up,” he said of markets like Toronto.

There, the average price at the end of 2024 is about $1.06 million, and it requires eligibility for $232,000 in revenue. That’s $95,000 above the median income.

John Carter, broker/owner of Re/Max River City in Edmonton, said affordability is “driven most buyers who move here from other provinces.”

He added that Edmonton’s current challenge is low inventory, especially in single-family homes.

“Most buyers want to have the same type of property and price point, with a major single family (family) under $500,000, so anything ‘good’ has multiple offers in the first few days on the market.”

Prices in Edmonton are rising. Today’s average price is higher than the end of 2024, and by the end of February, the price was about $450,000, an increase of more than 10% year-on-year.

Additionally, the average price of single-family detached homes is about $597,000, up nearly 12% in February.

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Still, Edmonton offers a lot of options in the more affordable segment. It is worth noting that the average price of apartments at the end of February was about $218,000, although it increased by 20% year-on-year. The Ratesdotca study also examined the affordability of apartments, with an average price of about $198,000 in Edmonton, and a median income exceeding the required eligibility income of more than $98,000.

In larger cities, apartments are also cheaper. In Toronto, the average price for this study was about $662,000. By comparison, single-family homes are nearly $1.3 million. Even so, eligible income from apartment mortgages exceeds median income of more than $21,000.

More importantly, the prices in the Toronto apartment market have been falling. In turn, Trans said buyers there face difficulties: buying when prices fall, just seeing them fall further, or waiting longer rates and prices fall higher, but risky prices take off.

“We talked about FOMO a few years ago, but now it’s more about the fear of overpaying.”

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