The Southern Ontario Housing Market

Since this blog tends to focus either on national topics or the Toronto real estate market, I thought it’d be a good idea to have a look at how the real estate markets of other cities in Southern Ontario are doing at the moment. The data I will present is taken from the most recent RBC Housing and Affordability Report.

The first column lists the current % of median income needed to pay for mortgage costs, property taxes and utilities for a bungalow in each city (bungalows are often used as a convenient barometer for the housing market as a whole). Thus, the lower the measure, the greater the affordability. The second column lists the current ratio of home sales to new listings for the city’s housing market as a whole. RBC considers a ratio less than 0.40 as evidence of a buyer’s market, a ratio larger than 0.60 as evidence of a seller’s market and an intermediate ratio as evidence of a balanced market.
Hamilton
Affordability in Hamilton is currently close to its all time low of 13% set in 2006. At the same time, the city is currently considered a seller’s market, though to a much smaller degree than the previous decade where the sales to listings ratio was consistently at 0.80. One would imagine that the relative affordability of homes in Hamilton will likely push the ratio back up to its early-2000s level.
Kitchener
Similarly, Kitchener’s affordability measure is currently sitting very close to its own all time low of 19%. Historically, affordability in Kitchener has been extremely consistent, typically hovering around 20-28%. Its sales to listings ratio displays alot of similarity to Hamilton’s, expected given their geographical proximity. Kitchener is currently on the high end of the balanced market, likely to return to the seller’s market status it has maintained for most of the last decade.
London
Currently sitting at its all time low of 20% (a level of affordability not atypical in London), London is also currently considered a balanced market. Historically, it has never veered too far into buyer or seller’s market territory, echoing the consistency shown in its affordability levels.
Ottawa
In contrast, affordability in Ottawa is not particularly strong relative to its recent past. Hovering around 30% in the last 4-5 years, Ottawa had typically seen mortgage carrying costs in the low to mid-20s over the preceding decade. Ottawa’s sales to listings ratio is currently on the edge between a balanced market and a seller’s market, basically where it’s been since 2002.
St. Catherine’s
Similar to its southwestern Ontario neighbours, housing affordability in St. Catherine’s currently sits around 20%, a level its hovered around for nearly two decades (aside from a short time around 2006-2008 when interest rates jumped). However, compared with its neighbours, the St. Catherine’s housing market has more consistently maintained itself within balanced market territory, where it currently sits.
Toronto
As the biggest city in Southern Ontario, it is no surprise that housing affordability is worst in Toronto. However, it is currently sitting within the mid-30s to low-40s range that it has occupied for at least a decade. Toronto’s sales to listings ratio, much like Ottawa’s, has hovered around the border between a seller’s market and a balanced market, though recent macro shocks has increased variability in the last four years.
Windsor
Another city with all time best affordability levels, Windsor has long maintained an affordability level just under 20%. Moreover, it has long maintained the most consistently balanced housing market in Southern Ontario, rarely finding itself too far into either seller or buyer territory before a correction rebalances it.
Corroborating some of the recent posts regarding a potential housing bubble in Canada, the RBC data seems to suggest that beyond the big city of Toronto (and to a lesser extent Ottawa) the real estate in most areas is relatively balanced and not likely to experience a bubble in the near future. For those looking to buy in any of these areas, the most sure fire way to ensure that affordability is maximized is to discuss your plans with a qualified mortgage broker.