Canada’s Recent Immigrants Aren’t Paid Enough To Support High Home Prices

Canadian real estate prices are climbing on the country’s booming population. More demand means higher home prices, right? Not so fast, it may not be as straightforward as the narrative. Statistics Canada (Stat Can) data released today shows immigrant income levels from a survey conducted in 2021. Recent immigrants to Canada earn significantly less than their peers, and would struggle to pay for basic shelter at today’s prices—nevermind drive prices higher.

Canada’s Recent Immigrants Earn Much Less Than Non-Immigrants

Immigrants that arrived in Canada from 2016 to 2019 earn significantly less than non-immigrants. Those immigrants had a median income of $35.6k/year, about 20% (-$7.2k) less than their non-immigrant peers. If you assume a dual median income household, finding shelter within their budget isn’t an easy task. 

Canada’s Recent Immigrants Can’t Afford To Rent In Most Cities

Rental housing within their budget isn’t an easy task at those income levels. Maxing out their budget to the shelter poverty limit of 30%, they can afford a maximum of $1,780/month. That’s about 17% lower than the $2,140/month a dual income, non-immigrant household could spend before hitting the shelter poverty definition. 

The average listing for a one bedroom apartment across Canada was just a hair over $2,000/month in April. Keep in mind that’s across the country, not in more expensive cities like Toronto (avg. $2,370/month) or Vancouver ($2,600/month)

Canadians Could Afford To Buy A Home In Just A Handful of Cities

Buying a home is also going to be a challenge at this income level. If we assume they max out their leverage and use a high ratio mortgage, the max purchase price is around $300k. It’s about 18% (-$65k) lower than a non-immigrant household could afford.  

A budget of that size won’t go far across Canada. According to CREA, a typical home across Canada was $709,000 in March. Only a handful of cities are even close to the budget—Winnipeg ($331k), Moncton ($309),  Quebec City ($323k), St John’s ($313k) Regina ($309k), Mauricie QC ($231k), Fredericton ($273k), or Saint John ($270k). 

A narrative can carry a trend for a short period, but it becomes more difficult to hold. Rapid population growth and immigration can certainly drive demand, but incomes don’t quite support that long term. The only way to persistently drive rents without a rapid, inflationary growth of income, is by taking larger shares of incomes from households. However, a widespread adoption of shelter poverty isn’t exactly a strong selling point for future immigration.

22 Comments

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  • Sja 11 months ago

    If the government mandates that the income reported to CRA alone qualifies for mortgage eligibility, at least 30-40% of purchases will stop.

  • Quix 11 months ago

    As I regularly say, the secret to home ownership is to have bought one 10 years ago which was the last time home prices made any sense.

    That’s a big problem, if the majority of your country can’t afford to buy property.

  • John Johnson 11 months ago

    Hm. I think this ignores the complicated, non-linear effects of immigration, and I also think it relies too much on averages. As we know, the price of housing depends on the marginal buyer. Within every average, there are immigrants who are above average income earners. You don’t need a lot of them to shift the marginal price. Also, immigrants rent and therefore make renting more expensive, giving an incentive to those who might be interested in purchasing to go ahead.

  • Vancouver Landlord 11 months ago

    the immigrants don’t need to buy a house. the influx of immigrant renters will keep the rental market strong which will prop up house prices imo. I am a landlord renting a suit right now and I have never seen this demand previously.

  • M.Bury 11 months ago

    This is why we recently left Canada and moved to a country where you can still buy a middle income house for under $100k, where 100+Gb data mobile plans cost less than $10/month, ultra-fast fibre internet for under $40/month, meds cost 80-90% less for everyone not just those lucky enough to have an employer-sponsored health plan, and where fruit and vegetables taste like fruit and vegetables.

    A phrase comes to mind; something about travelling in a handbasket…

    • Alex 11 months ago

      Where is this magical place? I think leaving is the only option at this point.

    • Judd Bender 11 months ago

      Where did you move to?

    • Peter 11 months ago

      Curious what country or region you moved to.
      You did well. We are also planning to leave.
      Canada is broken and I can only see things getting worse here.

      • M.Bury 11 months ago

        There are many “magical” places around the world. Problem is that Canadians have a hard time thinking past North America – we trap ourselves in the “at least we are better than the U.S” mindset.
        We happened to choose a central European country, but I have friends who moved to other places all around the globe and they also have similar experiences.

    • M.Bury 11 months ago

      There are many “magical” places around the world. Problem is that Canadians have a hard time thinking past North America – we trap ourselves in the “at least we are better than the U.S” mindset.
      We happened to choose a central European country, but I have friends who moved to other places all around the globe and they also have similar experiences.

      • Cheon 11 months ago

        V4 countries aren’t that bad compared to Canada. The cost of living is cheaper and therefore those people earn more with their income despite their nominal income being 2 or 3 times lower than Canada’s. I’ve run calculations on nominal average incomes, currency conversion, and purchasing power parity per capita relative to gdp per capita. The average person in Czechia is just as well off as the average person in Canada. With that being said someone living in Prague still has the same problem as someone living in Toronto.

    • K S 11 months ago

      Please elaborate where did you move that sounds lovely !

    • JCH 11 months ago

      Wow, that’s great! Can’t wait to leave Canada also, and say goodbye to this insane cost of living. Will be about five more years for us until our kids finish school, then will go somewhere we can easily afford to buy a house.
      Sad about it, but also angry to have to leave our homeland just to own basic shelter.
      I hope more potential immigrants come to realize how Canada lies to them – one can have a much better quality of life in so many other countries.
      I’m exploring our immigration options, and have heard that Portugal will give perm residence on proof of a fairly low, achievable monthly income, so need to look into this some more.
      Happy to hear other ideas too, of course!

    • Matthew Davidson 11 months ago

      Curious on the country you moved to?

  • Ray 11 months ago

    Why, did anyone really think they were importing in millionaires.
    The system is collapsing. It’s either unaffordable through higher interest rates or higher prices.

    • J 11 months ago

      ZIRP caused the price ballons (3x actual fundamentals of sustainable debt). Next 6-18months gonna be interesting. All eyes on JPow and Tiff.

      Of course, another shock(s) are also possible from other major players in this game of monopoly.

  • Slam 11 months ago

    Some would work two or three jobs to afford what they need. While others might go for the quick but illegal ways like stealing, robbing, drug trafficking, frauding etc. The govt wants to sustain the high flying housing market (and tax revenue) by massive immigration. But there is a steep social price to pay. Govt should pay attention on how people lives well.

  • Shandawg 11 months ago

    We were importing millionaires for years . Tons of cash flowed into this country. All the gold has been picked from Canada.

  • Bev 11 months ago

    It is actually worse if one considers data not captured. Eg costs of maintaining a home eg condo where even guidance for diligent boards has been inaccurate for a couple of decades
    No surprise that social housing has not been maintained but surely there could have been lessons learned for condo strata multi dwelling units
    The cao is now trying to collect data from owners on reserve funds it needs to include the maintenance fee portion funding reserve pool and condos getting hit with both special assessments and fee hikes
    I have no doubt the build out frenzie will add to maintenance costs even as we ease out of Covid
    The tax structure also is more favourable for investor landlords versus owners residents on condos
    And many owners may not be aware of common area taxes on top. Of their dwelling unit size
    With tax rebates to developers quests who has had the infrastructure build out costs for basic services shifted to them
    And tax rebates for eco friendly upgrades eg windows and sliding doors are problematic for condo owners to access and what of via the hcc s to relieve reserve funds a bit or is this measure still synced with single dwelling homes?
    So a lot of this was foreseeable so why was this ignored?
    And while tech has brought convenience it is also given the costs a lifestyle upgrade eg consider stamps versus internet especially in the Canadian context. So some of these life style enhancements blossomed as interest rates were declining now we have the reverse although not as intense as 1970s 80s but there was also an uptick in dual income households to help offset the high interest rates

  • Ike 11 months ago

    The biggest barrier is the down payment. We do not know of anyone that has a couple hundred thousand dollars saved up in the bank account for a down payment.

    That means buying a house is out of reach for most people in Canada, not just recent immigrants.

  • Jack 11 months ago

    Go to a construction site and count how many new immigrants are working in the trades – where we need labour. Instead they’re in services … retail, delivery – hallow jobs that perpetuate mass and unsustainable consumerism versus infrastructure, housing etc. It makes no sense.

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