Most Affordable Major Ontario Real Estate Markets

Ontario real estate was on a seemingly endless upswing throughout the coronavirus pandemic, leaving many homebuyers priced out of their local markets and seeking housing affordability elsewhere. Indeed, Ontario’s suburbs and rural markets have absorbed much of the spillover, attracting homebuyers with their lower price points, higher square footage and green space galore. This new-found demand has put upward pressure on prices, but that does not mean all Ontario real estate markets are out of reach for first-time buyers, families and newcomers as immigration to Canada kicks into high gear.

According to the Canadian Real Estate Association (CREA), the national average sales price climbed 6.7 per cent year-over-year in June to $709,218 (not seasonally adjusted). Based on RE/MAX Canada’s 2022 Housing Affordability Report, when prices were mostly elevated from the pandemic-era housing boom, many major real estate markets across Canada still sit below this national average price. Indeed, this dispels the notion that housing in Canada is entirely unaffordable, despite the country having one of the hottest real estate markets in the world.

While many real estate markets have slumped in 2022 and in the first half of 2023, many industry experts purport that the situation has normalized and stabilized, and the correction has peaked. However, mortgage costs could be a different story, with interest rates potentially inching higher amid rampant price inflation.

Toronto is Ontario’s largest city by population and has some of the most expensive real estate in Canada. At the same time, the province also has several options for affordable real estate. So, where can you get the biggest bang for your buck in the Ontario real estate market today?

The Most Affordable Ontario Real Estate Markets

First, it is important to understand what determines an “affordable market.” Contrary to popular belief, affordability goes beyond the average home price, taking into account the level of income in relation to that average price. A recent survey conducted by Leger on behalf of RE/MAX Canada asked Canadians to define what affordable housing means to them. Thirty-eight percent said housing affordability is a home they can afford that meets their basic needs and includes some liveability elements, such as green spaces and restaurants. Digging a bit deeper into the dollars and cents of affordability, 18 percent of Canadians define housing affordability as allocating only 30 to 40 per cent of their monthly household income toward housing costs, including mortgage payments, property taxes and other housing-related expenses.

According to Statistics Canada, the median household income in 2023 is $70,100 in Ontario. Based on these figures, the typical gross monthly income is more than $5,800. Now that we have calculated the dollars and cents of households’ earnings, here are three major Ontario real estate markets that provide affordability to families, a term that is generally defined as at or below 40 percent income.

Here are a few of Ontario’s most affordable real estate markets (calculations based on May or June 2023 statistics, 20 percent down payment, and five per cent mortgage rate).

Thunder Bay, Ontario Real Estate

• 2023 Average Price: $335,500 (Estimate)
• Average Down Payment: $66,700 (Estimate using the 2023 average price)
• Average Mortgage Amount: $268,800
• Monthly Mortgage Payment: $1,951.28
• % of Monthly Income Allocated to Mortgage: 33.63 per cent

After increasing throughout 2021-2022, home sales in Thunder Bay are expected to decrease by five per cent in 2023. The increase was attributed to move-over buyers from more expensive urban areas, who have enough equity to outbid and drive prices up. Buyers were willing to push their budgets modestly higher to “win” the bid, according to Mario Tegola, a local broker and owner of RE/MAX First Choice Realty. Now, downsizing seniors and first-time buyers are expected to drive market activity, with a particular interest in income suites.

In an anecdotal ranking on affordability in the region (1 being the most unaffordable and 10 being the most affordable), Tegola ranked Thunder Bay ranked at 6. However, despite its mid-scale ranking, locals are still concerned about affordability factors, with the cost of living and inflation topping the list, followed by the impacts of low housing supply and economic/employment conditions.

The top three most affordable neighbourhoods in Thunder Bay are East End, Simpson-Ogden, and Downtown Fort William. In comparison, the top three least affordable neighbourhoods based on average residential sale prices in the region are River Terrace, Mariday Park, and Sherwood Estates.

Despite good local affordability, homebuyers have been exploring alternatives to traditional home ownership, with some choosing to rent a part of their primary residence to generate supplemental income. Others are opting to rent instead of buy in a challenging market plagued by a housing supply shortage.

Sudbury, Ontario Real Estate

• 2023 Average Price: $492,410 (Estimate)
• Average Down Payment: $98,482 (Estimate using the 2023 average price)
• Average Mortgage Amount: $393,928
• Monthly Mortgage Payment: $2,291
• % of Monthly Income Allocated to Mortgage: 39.5 per cent

Since the beginning of 2022, Sudbury has been experiencing move-over buyers coming to the region from larger cities or more expensive urban areas. As a result, average sales are expected to increase by 6.5 per cent by the end of 2023, with the seller’s market expected to continue. Additionally, the luxury home segment remained stable throughout 2022 and is expected to increase in 2023 due to a robust waterfront market.

When asked to anecdotally rank the region on an affordability scale (with 1 being the most unaffordable and 10 being the most affordable), Cathy Gregorchuk, a former long-time Sudbury RE/MAX broker, assigned the region a 7 rating, since it is still very affordable despite recent price increases.

Although Sudbury real estate is relatively affordable, the most significant factors impacting affordability in the region are low or diminishing housing supply, followed by rising interest rates and out-of-province/out-of-region buyers. There have been no improvements to affordability in the region in the last three years, the only factor of note is the FHSA, but it hasn’t shifted the needle, primarily due to low inventory and high buyer demand.

Alternatives to traditional home ownership, such as co-ownership or the need to rent a part of the home for supplemental income, have not been a factor in the area due to its relative affordability, even with rising home prices. Prospective buyers in Sudbury are most concerned about continuously rising interest rates and the relatively higher prices of homes.

The top three most affordable neighbourhoods in Sudbury are Donovan, Gatchell, and Coniston. In comparison, the top three least affordable neighbourhoods based on average residential sale prices in the region are Lo-Ellen, Lockerby, and New Sudbury.

Buyers are concerned and are in a bit of a holding pattern at the moment, with uncertainty looming in the back of their minds.

Windsor, Ontario Real Estate

• 2023 Average Price: $573,929 (Estimate)
• Average Down Payment: $114,785 (Estimate using the 2023 average price)
• Average Mortgage Amount: $459,144
• Monthly Mortgage Payment: $2,670
• % of Monthly Income Allocated to Mortgage: 46 per cent

Prices in Windsor had been expected to plateau in the first half of 2023 before bouncing back in the year’s second half. In line with prices, sales did experience a general decline in the first half of 2023 and are now seen rebounding in the year’s second half. Move-over buyers from expensive urban markets have driven the trend of rising prices since the beginning of the year, who have been seeking affordability in relation to their big-city origins.

Although Windsor is a relatively affordable region, factors continue to weigh on homebuyers, including economic/employment conditions, rising interest rates, and out-of-province/out-of-region buyers impacting demand and prices.

Since the start of the year, many first-time homebuyers in Windsor have started pooling finances with friends and family as alternatives to traditional home ownership to afford a home. Prospective buyers in Windsor anticipate prices to cool but are concerned about rising interest rates and the inability to afford a home.

The top three most affordable neighbourhoods in Windsor are Meadowbrook, Roseville Gardens, and Ford-Ferndale. In comparison, the top three least affordable neighbourhoods based on average residential sale prices in the region are Walkerville, Downtown Windsor, and East Riverside.

With home prices in the region starting to cool – a trend that is anticipated to slow toward the end of 2023 and heading into 2024 – due to rising interest rates and modestly higher supply – buyers may be able to enter the market a little easier.

Finding an affordable place to live in Ontario is not as straightforward as in other parts of Canada. Still, there are markets throughout the province that are more affordable than the larger cities. With some research into the average income of an area compared to the price of its real estate, you should be able to find the perfect home. These stats should help you identify the best place for your family and your budget!