It’s 2019. What is “affordable housing” nowadays? How does it look to Canadians across the country? To be quite frank, it’s a very speculative definition.
For some people, “affordable housing” is a term given to housing that the government owns or has a stake in. For others, it means homes that are modestly priced.
For many years, it’s been commonly recommended to set aside one-third of your income to put into housing. This benchmark has remained the same for decades, and yet, housing numbers have risen significantly compared to income levels.
In reality, the portion of your income needed to wisely put into your housing is a case by case percentage.
For instance, some people may want to spend more to live in a certain area where the market is growing (while also building up the equity in their home). On the other hand, others may want to drastically reduce the portion set aside for housing due to lower cash flow (such as those that are retiring or have already retired).
Trying to figure out what is really “affordable” is difficult. However, it’s definitely been a struggle for some Canadians to juggle whether or not they’ll be able to afford their first home soon.
Many are choosing to continue to live at home, rather than try to “make it” in the real world because they are usually able to get a pretty good discount from their parents. Usually, this is a choice that mostly results from the slim availability of affordable homes.
However, there is a ray of hope ahead for those still waiting for a chance at owning their own home.
Looking Forward In 2019
The Federal Government released the 2019 budget just a few weeks ago highlighting several plans to assist with affordable housing.
The First-Time Home Buyer Incentive will allow those looking to own their first home a reduction in the necessary money needed for a mortgage. The government is promising to allocate $10 billion over a nine year period starting this year (and finishing in 2028), which will go through the Canada Mortgage and Housing Corporation.
Also within the budget is a project to build 42,500 new housing units across the country (especially low-cost housing)
Another bonus for homeowners is the RRSP withdrawal amount being increased from $25,000 to $35,000.
Current Market Prices
Here are the March 2019 house pricing statistics showing the average sale price in various regions in Canada, with the aggregate being $617,200:
Greater Toronto: $779,100
Greater Vancouver: $1,011,200
Greater Montreal: $357,600
Vancouver Island: $488,800
Okanagan Valley: $830,000
To an average first time home buyer, these home prices may seem bleek. However, average home prices across Canada have begun to hit a bit of a lull from 2018 to 2019, opening a gap for potential first-home buyers to jump in the market.
In fact, real estate data at SKYHUB suggests that 2019 has opened up a perfect opportunity for those who have been hoping for greener grass for the past 10 years. According to the CREA’s national statistics, the national average sale price fell 1.8% from 2018 to 2019, rather than an average rise of 6%.