Canada

Canadian Property Bubbles Are Now So Big, LA and NYC Are Now More Affordable

Canadian property bubbles have seen affordability creep past the world’s most influential cities. Oxford Economics released new North America Housing Affordability Indices (HAIs) for Q1 2021. The index measures housing affordability for the median household in various cities. They found Canada’s hottest real estate markets are now less affordable than globally influential US cities. Heck, Canada’s property bubble even pushed the tiny steel city of Hamilton to become less affordable than Los Angeles or New York City.

Vancouver, Toronto, and Hamilton Home Prices Are The Least Affordable

Canadian housing markets topped their list of least affordable markets in North America. Vancouver is the king of unaffordable housing, with a 1.67 HAI score, by far the highest. A relatively distant second is Toronto, with a 1.50 HAI score. Hamilton (?!) comes in third with a score of 1.50. No, this isn’t a Canada-specific list. It’s a comparison of all of North America. These 3 cities are just at the top of unaffordability.

New York City, and Los Angeles Housing Is Now More Affordable

World-renowned American cities, with notoriously expensive housing, fell behind Canadian cities. Los Angeles, for instance, came in as the fifth least affordable city on the list. Seattle came in 8th, with an HAI score nearly a third lower than Toronto or Vancouver. New York City, whose Greater Region has a GDP the size of all of Canada, was the 9th least affordable.  

But wait, there’s more. Montreal home prices have been on fire, since home buyers figured it would be the next expensive city. It now ranks just behind New York City in terms of the lack of housing affordability. Miami, America’s latest tech super hub, is seeing explosive economic growth. It’s still more affordable than Montreal.

Quebec City Has The Most Affordable Housing In Canada

The top three most affordable cities did include one Canadian city. At least until investors read this paragraph. Chicago is the most affordable city in the list with an HAI score of 0.60. Columbus comes in second with a 0.62 index score. Quebec City’s HAI of 0.64 landed it in third. Give that until the end of the month in this speculative environment. 

Worth mentioning that three other cities also made the top 10 most affordable. Edmonton and Calgary, Alberta’s two big cities, came in 6th and 10th, respectively. Winnipeg came in 8th. Yes, all of these are Prairie cities. It shouldn’t be a big surprise Canada’s national housing agency thinks Ontario and BC are past peak growth. The Prairies are now projected to outpace for population growth, partially due to affordability.

Skilled Millennials are going to have a really hard time deciding where to live. Do they go for the small Canadian city, largely known for its steel manufacturing? Or somewhere more affordable, like the global financial capital of New York City? Tough one. 

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20 Comments

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  • Mo 2 months ago

    What happens when the whole economy is just based on housing. Americans are doing it with the stock market, but the big difference no one needs to live in the stock market.

    • Ethan Wu 2 months ago

      Important point my dude. Residential investment is so high, people don’t see the point of investment in anything else.

      It’s like the tech bubble in 2000. People didn’t want to go out or shop, because every dollar needed to be sunk into tech stocks. They thought it was their meal ticket.

      Dollars to doughnuts, if I had to start my career now and housing was an issue, I would be in Miami or New York instead of in Toronto or Vancouver.

  • MR 2 months ago

    Welcome to Canada.

    • Gerry 2 months ago

      I’ve lived through this 3 times. It never ends up the way people think it does.

  • Pete 2 months ago

    LOL. Should I move to Hamilton, where it’s grey half the year, or Los Angeles where it’s beautiful all year round. Let me think.

  • Average Man 2 months ago

    Toronto has been less affordable, relative to local salaries, than NYC for a couple years now, but the fact that HAMILTON is now there is insane.

    • Canaduh 2 months ago

      Hamilton is a world class city. It is located alongside one of the great lakes, gentrification is rapidly increasing, and it has its own major manufacturing base. Plus its one hour to Toronto and one hour to the USA. In contrast, what does NYC and LA offer other than everything from infrastructure problems to taxation issues?

      Just kidding. Nice to live in fantasy land for a few minutes. Keep calm and mortgage on.

  • JR 2 months ago

    Once COVID is under control and we have cross border flow, I’m out of here. Markets can remain irrational for longer than I can care about living in them. Employees are all remote now, so dropping the office space is going to be a breeze.

    Canada doesn’t need income taxes apparently. It will survive on transfer taxes on homes traded back and forth apparently.

    • Canaduh 2 months ago

      Out of interest for the anecdotal data set, permanent relocation or temporary?

  • World Class 2 months ago

    The bulls will tell you this all makes sense due to work from home being permanent. They will then give you a personal account of how they will work from home, or their cousin’s friend will be working from home and keep their 6 figure job.

    Two main points on work from home: most offices are going hybrid at the start, which likely means 3 days in and 2 days at home. Commuting from Hamilton to Toronto? Muskoka area to Toronto – really you want to drive at least 4 hours a day for the 3 days you are going in. Second, work from home also works in your company’s advantage – you can work from anywhere, perfect let me hire someone in a lower cost of living area and replace you. Short-sited based on a once-in-a-lifetime event.

    • Hello my friend 2 months ago

      Agreed. There’s 100 million skilled workers in India albeit with heavy accent waiting to replace any remote worker in North America at quarter the cost.

      Companies know this and are simply waiting for the right time to strike.

      • DV 2 months ago

        I work in the Toronto tech. Outsourcing and remote work is not new, this has been happening for many many many years. I also know a few people that work here remotely for American companies too easily earning 6 figures. 6 figures is not a high salary anymore. More people than you probably think already worked remotely/hybrid prior to corona.

        Everyone has tried to outsource entire projects at a quarter the cost; it’s not that simple and almost always ends the same. There are people that can do the work, and those that can’t. This includes the “Indians with heavy accents”.. lol. The ability to physically see you is not why people are paid more or hired here.

        Id be much more worried about your entire career becoming obsolete LONG before I was worried about being replaced by overseas labour.

    • Kris 2 months ago

      Lol so true. Now how does that apply to potential immigrants who were thinking of moving here for work? Maybe they apply for that job but just don’t immigrate? Work from home is going to bight most people in the ass. Remember, out of sight = out of mind. There is something to be said of face to face human interaction.

    • Paul 2 months ago

      The general rule for commuting is 90 minutes without traffic. I’ve recognized that number has gone up to about 120 minutes without traffic each way now. FYI people were commuting this distance before. They drive to a local go station and take the train the rest of the way so it’s not impossible. Perhaps this will finally push a better public transportation system in areas outside the GTA?

  • Don Jason 2 months ago

    Why no one is talking about supply? Supply is the main issue. Demand and supply determines the price.

    The second largest country in the world is running out of land.
    https://www.bnnbloomberg.ca/the-second-largest-country-in-the-world-is-running-out-of-land-1.1605274

    Supply shortage leads to skyrocketing prices
    https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.housing.housing-note.housing-note–may-12-2021-.html

  • Herry 2 months ago

    Canada = Shxthole

  • Bob Loblaw 2 months ago

    Not surprising given that Ottawa is a more vibrant and international, and a bigger financial center than NYC.

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