Earning a healthy, middle-class income? Good for you, but odds are slanted against you when it comes to ever owning a home in Canada these days. Statistics Canada’s Canadian Housing Statistics Program (CHSP) looked at first-time buyer incomes. The data shows that first-time buyers had much higher incomes than the median household. The problems extend beyond pricey regions like B.C., into more “affordable” provinces like Nova Scotia.
First-Time Homebuyers Earn Up To 36% More Than Typical Families
The median income of first-time homebuyers vs all households in 2023.
Source: StatCan; Better Dwelling.
Most of Canada can’t afford a starter home, according to the agency’s data. The agency looked at 5 regions, 4 provinces and 1 territory, between 2021 and 2023. They found that first-time buyers earned between 13% and 36% more than local median incomes. That’s a substantial gap, and you can probably guess where the worst offender is located.
The biggest gap is in B.C.. where households buying their first home had a median annual income of $145,000 in 2023. That works out to 35.9% (+$38.3k) more than the median income of all households. It was followed by Nova Scotia, where first-time buyers had an income of $120,000, 27.3% (+$25.7k) more than the median. At $110,000 in New Brunswick, they earned a fifth more than usual—20.6% (+$18.7k).
The CHSP doesn’t cover Quebec, and the other provinces lack comprehensive data. But the provinces above are a solid cross-section of Canada. They cover the most expensive province to some of the, um… least expensive provinces. It’s probably fair to project this as a national trend. After all, Ontario and Quebec’s data are very unlikely to boost affordability.
Canada’s First-Time Buyers Need Faster Than Normal Income Growth
The percentage gap between first-time buyer household incomes vs median household, 2021 vs 2023.
Source: StatCan; Better Dwelling.
The data only goes back to 2021 but it’s enough to highlight how sharply affordability eroded. In B.C., first-time buyers were still 25.5% above the median before rising more than 10 points over the next two years. Nova Scotia’s first-time buyers earned 20%, adding 7.3 points over the same period. Think about that for a moment. That means first-time buyers’ incomes in B.C. grew 48.6% faster than the median, and 36.5% in Nova Scotia. StatCan provided the numbers in real terms, so adjust for the inflation gap too.
Those regions have the steepest gaps, but there were more extreme climbs. In New Brunswick, first-time buyers went from 5.7% above the median to 20.6% more over those two years. Manitoba’s gap roughly tripled from 4.6% more than the median to 13.4%. Keep in mind that these are starter homes. First-time buyers also get heavy tax subsidies via rebates and cheap financing. Somehow, that still only leaves households with deep pockets able to participate in the market.
Yukon was the only region to improve over the period, though it remains unaffordable. Over the two years, first-time buyers went from earning 19.2% more than the median household, to 14.2% by 2023. Finally, a solution for Gen Z and Alpha. They just need to get used to 5 hours of sunlight and -40°C winters, out-earn some of the highest incomes in Canada, and boom! They can finally get on the property ladder… in the subarctic.
The problem here is much bigger than “sucks to be them.” It presents a systemic risk. First-time buyers are earlier in their careers and are buying a starter home. For most of the above regions, first-time buyer incomes are in the 70th to 80th percentiles. That puts them on the upper end of the middle class, if not the higher end.
At the low end, these buyers earn more than 70% of households. Unless the poor are selling their homes as upgrades, that leaves a very limited pool to move up the chain. This reduces transactional volumes and the spin-off GDP that home sales generate. It also means limited liquidity for those looking to sell their home, as there are fewer move-up buyers. Planning to retire with your home’s lofty valuation? It’s probably best to use a conservative valuation on those retirement spreadsheets.
