American homebuyers can take small comfort: It’s far worse up north.
The Canadian housing market is even more ludicrously expensive than the US’s, with the nation’s home prices recently reaching a new record high, which puts the average housing cost at almost double that of America’s.
Since early 2020, Canadian home prices have surged 30%, an increase which is “nothing short of stunning,” economist Robert Hogue wrote for a recent Royal Bank of Canada report (via Fortune).
As of February, the Canadian Real Estate Association reported that the average price of a Canadian home stood at 816,720 Canadian dollars, or $646,809 — over nine times the average household income.
In contrast, the US has seen slightly lower price increases, with home prices rising 27% over the same period, Fortune previously reported. In America, the median home price last month stood at $375,000, an all-time high and a 15% rise from a year prior.
The reasons for the unaffordability of both housing markets are almost identical, experts say: The pandemic demand for larger homes as they became “people’s workplaces, children’s schools, and [the center of] entertainment,” Canadian real estate brokerage Royal LePage’s president and CEO Phil Soper told Fortune.
In addition, millennials in both countries began buying their first homes and upgrading their starter homes while baby boomers added to demand by seeking homes to grow older in.
All of this is coupled with a dire lack of housing in both nations.
“[It’s] hard to wrap my head around prices right now,” investment bank equity sales director Johnny Chen, 33, told Fortune about his ongoing struggle to buy an affordable house in Vancouver’s cutthroat real estate market. “There’s just so much competition.”
Despite being in the country’s top income bracket and looking through listings on a daily basis, Chen finds that even single-family homes on the market in the CA$3 million ($2.4 million) range often need “substantial renovation work” forcing him to continue his search from a townhouse he owns beyond the city center.
“It’s hard to know how much the home will actually cost with inflation in labor and building materials, plus slow turnaround times for building permits,” he said. “Vancouver’s real estate market is a bit crazy.”