The Canadian government has been increasing interest rates to attempt to drop housing prices. This has been felt across the country, but what has the effect been in Ontario?
Prices are still high.
The short story is that prices are still high but falling. According to CTV News, “The benchmark price of a home in Ontario was $904,800 in August 2022, down 15.9 per cent from its peak in February 2022.” While this is progress and shows the government's efforts are helping, this price is still 7.7% higher than last year's.
Ontario has seen the most dramatic drop.
Since the introduction of the increased interest rates, Ontario has seen the biggest drop of almost 16%. This was felt most in regions within a 2-hour drive to Toronto. Prices in Cambridge fell 24.5 percent, while in Oakville, London and Kitchener-Waterloo, prices fell 23 percent.
In comparison, prices in British Columbia remain the highest with a drop of only 5% across the province. Quebec saw a smaller drop of 2.5%. In the prairies, Alberta and Saskatchewan saw “small increases” in housing prices and Manitoba saw a 4.5% drop. Every province in the Atlantic Canada region saw increases in prices.
Buying is still difficult.
Despite these drops, home ownership has never been harder. Bloomberg writes, “total ownership costs, including mortgage payments, now soak up 60% of a typical household’s income, higher than the previous record of 57%.”
What does this mean for investing?
For investors, the market is hot. Families are still relying on renting since home prices are so high. Families are increasingly looking for more room in their homes and are turning to the suburbs of Toronto to fill that desire. Cities like Hamilton are seeing rapid development with investments in the city, which is causing spikes in population. Communities outside of Toronto may be the new hotbeds for investment as they continue to grow for families that want more space and affordability.
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