Monday , 2 October 2023

Cross-Border Comparison Of Best & Worst Cities For Housing Affordability – How Does Your City Fare?

American and Canadian home buyers may have their unique cultural nuances, but whether they live north or south of the border, they face similar issues when buying housing: incomes keeping pace with real estate prices in the hottest markets. A recent study by Zoocasa examined home affordability relative to incomes and found that Canada’s largest markets rank just as highly as the hottest ones in the U.S. – including those that have seen prices recover beyond their pre-recession peaks. Check out the infographic below to see how each U.S. and Canadian market ranks according to housing affordability.

To determine the level of affordability in each market, the study sourced December 2018 median home prices for 30 major U.S. markets and 5 Canadian, and calculated the minimum income required to purchase in each city. That amount was then compared to the actual median income earned, to determine whether the market presented buyers with an income surplus (when the median income is sufficient, or more than enough to purchase the median-priced home), or an income gap, which indicates incomes have not kept pace with real estate price growth.

For the calculation, it was assumed a 20% down payment is made, and the mortgage is taken out over a 30-year timeline (per term for U.S. borrowers, and amortization for Canadian). U.S. affordability was calculated with a fixed mortgage rate of 4.5%, while 3.75% was used for Canadian borrowers, to reflect the average mortgage rate available to an applicant with good credit. Additional debt, taxes, insurance, heating, and other homeownership-related expenses were not included. Canadian dollar figures were then converted to U.S. dollars at an exchange rate of $1.33 CAD to $1.00 USD…

Editor’s Note: The above excerpts* from the original article have been edited ([ ]) and abridged (…) for the sake of clarity and brevity. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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(*The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.)