Looking to dip your feet into the real estate market in Canada? Buying a starter home is a great way to get your foot in the door. According to real estate website Point2Homes, some of the most affordable starter homes for sale in Canada are located in the eastern half of the country, as well as in the prairies. Of course, “affordable” is relative, and depends on location and household income. But that doesn’t mean we can’t look at some of the cheapest options out there!
What is a starter home?
Think of starter homes as “entry-level,” ranging in price from approximately $200,000 to $700,000, depending on the market. According to Point2Homes, this purchase typically marks the start of a first-time home buyer’s ownership journey.
For this study, Point2Homes looks at the average value of starter homes in Canada’s 50 largest cities, using renter household income data from Canada Mortgage, Housing Corporation, and Stats Canada to rank how much you’d need to afford payments on a starter home in each city.
The study also takes into consideration property taxes and insurance costs to come up with what they define as a “starter cost,” which they’ve valued at half the benchmark price in each of the 50 cities.
According to Point2Homes, this method paints a more accurate picture than a fixed price, as it better reflects the differences between markets in terms of housing prices, incomes, and available homes.
Most affordable cities based on income
All in all, the study found that renters living in 36 of Canada’s 50 largest cities can’t afford a starter home, and earn up to 60% less than what they’d need to become first-time homeowners.
The good news is that renters in these 14 cities earn 100% or more than what they’d need to purchase their first home.
Edmonton clearly tops the list as one of the most affordable cities to buy a starter home, where the renter household income sits at $70,000 – with the price of a starter home around $185,000. Factoring in a 20% down payment and 5-year fixed-rate mortgage with an interest rate of 5.75% – these numbers mean that Edmontonians earn 52% more of the minimum income they’d need to buy a starter home.
Likewise, homebuyers in St. John’s and Regina earn 50% and 40% more than they’d need, respectively. While homebuyers in the remaining cities are not quite as lucky, they’re still able to afford a starter home with the current average income.
By contrast, in 12 cities in BC and Ontario (including Toronto and Vancouver), renters earn 42% to 59% less than what they’d need. So if you’re looking to become a first-time homeowner sooner rather than later, you’ll probably want to venture to one of the cities above.
Starter homes for $200,000 or less
And if we’re just looking at home prices – these cities all have starter homes available for $200,000 or less – which is considered affordable even by traditional starter home standards!
- Saguenay, QC – $125,680
- Trois-Rivières, QC – $133,459
- St. John’s, NL – $153,800
- Regina, SK – $155,600
- Quebec City, QC – $159,629
- Lévis, QC – $164,750
- Winnipeg, MB – $168,150
- Sherbrooke, QC – $169,545
- Edmonton, AB – $185,500
- Saskatoon, SK – $187,800
For more info on starter home availability and affordability in Canada, you can check out the full breakdown of starter home prices in 50 of the largest Canadian cities.