Royal LePage compiled a list of the 15 most affordable cities based on the percentage of income needed to pay a mortgage, using provincial income data and city home prices.
The mortgage calculation is based on a three-year fixed-term loan at 5.71 per cent, amortized over 25 years with a 20 per cent down payment.
Of the 15 most affordable Canadian cities, four are located in Quebec and four in the Atlantic provinces. No cities from British Columbia made the list.
Here are the 15 most affordable cities in Canada:
1. Thunder Bay, Ontario
2. Saint John, New Brunswick
3. Red Deer, Alberta
4. Trois-Rivieres, Quebec
5. Edmonton, Alberta
6. Regina, Saskatchewan
7. St. John’s, Newfoundland and Labrador
8. Quebec City, Quebec
9. Sherbrooke, Quebec
10. Winnipeg, Manitoba
11. Fredericton, New Brunswick
12. Saskatoon, Saskatchewan
13. Windsor – Essex, Ontario
14. Charlottetown, PEI
15. Gatineau, Quebec
Topping the national affordability ranking with an aggregate price of $299,300 for the first quarter of 2024, Thunder Bay is the most affordable Canadian city in 2024.
In this city, 22.2 per cent of a household’s monthly income would go towards servicing a mortgage payment, which is three per cent lower than the next cheapest city.
The monthly mortgage payment based on 3-year fixed term of 5.71 per cent over 25 years is $1,563.25, while the 2022 provincial median total household income is $84,400. The city is a popular choice for Greater Toronto Area residents, 15 per cent of whom want to relocate to Thunder Bay. 9 per cent of Vancouverites exhibit the same sentiment.
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“Thunder Bay offers the best of both worlds – small city feel with a low cost of living and proximity to nature. For decades, the local housing market had been fairly stable, with moderate population growth keeping prices low. However, over the last ten years, as our local economy has diversified and more residents have moved up north, the market has shifted materially,” said Nathan Lawrence, sales representative and partner, Royal LePage Lannon Realty.
“Our city offers many great employment opportunities, from the trades to medical services, and has attracted major businesses to the region. This, combined with affordable housing, has created a gradual build up in our population, causing home prices to appreciate.”
The demographic of people moving to Thunder Bay is also diverse, with post-secondary students and retirees alike making the city their home. Some residents have been acquired through Ottawa’s Rural and Northern Immigration pilot program, which gives Canada PR to skilled foreign workers looking to live in northern communities.
“Where home prices are lower, elevated interest rates have a relatively smaller impact on mortgage carrying costs, meaning our local real estate market remains more affordable than most,” said Lawrence.
“Work is being done to increase housing starts and development here, which I believe will help Thunder Bay maintain its affordable city status for the near future as buyer demand continues to grow.”
Next up on the list is Saint John, New Brunswick, which has an affordability factor of 25.1 per cent This means that 25.1 per cent of a household’s monthly income would go towards servicing a mortgage payment.
The aggregate price for Q1 2024 is $267,900, and the median total household income is $67,000. This is nearly $20,000 lower than the income in Thunder Bay.
The cities of Red Deer, Trois-Rivieres, and Edmonton take the third, fourth, and fifth spots on the list, with an affordability factor of 25.7 per cent, 28.5 per cent, and 28.9 per cent respectively. They represented the provinces of Alberta and Quebec.
Lifestyle Considerations Important
Quebec City, which is eighth on the list, is the most popular destination among respondents in the Greater Montreal Area (GMA) (29 per cent of respondents saying they would buy a home there if they were able to find a job or remote work), while Edmonton is the top choice for Greater Toronto and Greater Vancouver residents.
One of the main deciding factors for relocation is lifestyle, according to Yolevski.
“Unsurprisingly, in addition to lower home prices, some Canadians who are contemplating a move to a more affordable city are also seeking reduced everyday expenses, and a break from the hustle and bustle of urban centres.
“This is a trend that began prior to the pandemic and was accelerated during the real estate boom of 2020 and 2021, when many homebuyers relocated to smaller communities where they could safely social distance whilst enjoying greater privacy, more living space and better access to the outdoors.”
Atlantic Canada Has Four Of the Top 15 Cities
Atlantic Canada had an impressive four names on the list of 15. One of them, St. Johns, made seventh place on the ranking.
“With its variety of recreational activities and beautiful landscapes, St.John’s offers a relaxed lifestyle away from the so-called rat race. People who relocate to Atlantic Canada are often seeking a cultural change that offers a quieter and more peaceful living environment,” according to Jerry Boyles, who is the sales representative at Royal LePage Property Consultants in St. John’s.
“Housing in St. John’s has become less affordable over time, but still remains accessible to the average Canadian. Relative to home prices across the country, St. John’s is expected to continue to be affordable for the long-term.
“However, labour shortages, zoning restrictions and a general resistance to densification will challenge the creation of new homes needed to meet demand in the future, forcing prices upward.”
Quebec Also Has Four Cities On The List
Quebec also had four names on the list. Gatineau, which made fifteenth among the most affordable cities, usually sees 36.8 per cent of a household’s monthly income dedicated to service a mortgage payment.
Dominic St-Pierre, Senior Vice President, Business Development, Royal LePage asserts this to the French-Canadian province’s historically low immigration and interprovincial migration rates, translating to lower demographic growth and lower real estate demand.
Canada’s most expensive cities in 2024 are, unsurprisingly, Vancouver and Toronto, with respective average house prices of $1,131,600 and $1,089,800.
The spots of third, fourth, and fifth most expensive cities are taken by Victoria, Hamilton, and Ottawa. Montreal comes in at tenth place, with an average house price of $501,000. This can largely attributed to St-Pierre’s assertion that Quebec’s lower demographic growth leads to lower real estate demand.
