Hamilton renters priced out of buying starter homes: report

Renters need to earn at least $95,455 in order to afford a starter home in Hamilton. 

Hamilton’s renter household income is $59,726, $35,729 less (or 37 per cent less) than the minimum income required to cover the mortgage for a starter or entry-level home, according to data by Point2, an international real estate search portal.

Hamilton is among 24 of Ontario’s largest cities where starter homes are no longer affordable homes that used to cost around $200,000.

Point2 assessed data on entry-level home pricing and the renter household median income to determine where renters could afford to buy a starter home in Canada. 

Carmen Rogobete, communications strategist with Point2, said the share of available starter homes makes up a “modest” 1.8 per cent of listings in Hamilton, which was 33 homes at the time the data was gathered.

The value of a starter home in Hamilton is $375,961, based on half the city’s median price. So that would mean the down payment would be $75,192 and the loan amount $300,769.   

In some markets, entry-level homes surpass $700,000. 

The data considered that the monthly mortgage is not more than 30 per cent of a renter household income. It also assumes a 20-per-cent down payment with a loan based on a 5.75-per-cent, 25-year fixed-rate mortgage.

POINT2

Ontario is priciest place to be if you want to buy a home: report

In Point2’s analysis, Ontario dominates the list with least affordable cities. The study found that in 24 of Ontario’s largest cities, renters earn 13 per cent to 59 per cent less than the minimum income needed to cover the mortgage for a starter home. In 12 cities, residents are priced out because they only earn about half the required amount.

In five Ontario cities, renters make less than half the income needed to buy a starter home. Renters in Richmond Hill, Oakville, Markham, and Vaughan need around $160,000, though they only earn an average of $70,000.

In Canada’s 14 least affordable cities, renters are 42 per cent to 59 per cent short of their homeownership dreams. For most of these cities, starter home prices are higher than $500,000. Three cities exceed $700,000.

Most Canadian big cities unaffordable for aspiring homeowners: report 

On a national level, renters in 36 of Canada’s 50 largest cities can’t afford a starter home amid rising home prices, high mortgage costs and a housing shortage. They earn up to 60 per cent less than what’s needed to buy starter homes.

Starter home inventory is nearly zero in 11 of these cities while 26 others have a supply below 10 per cent.

‘Affordability miracle’ exists for 10 cities: report

For other 14 cities, however, renters are more fortunate to earn more than the income needed to buy a starter home. In those cities, the renter household income is two per cent to 52 per cent higher than the minimum income needed. Edmonton and St. John’s top the list since renters earn 52 per cent and 50 per cent above the required income.

In 10 of the 14 cities on the list, starter homes cost less than $200,000.

“Therefore, the fact that these cities still have starter homes with this price tag is a true affordability miracle,” according to the report.

Only 14 cities had renters who earn 100 per cent or more than what’s needed to afford an entry-level home.

In 13 cities, starter homes represent at least 10 per cent of the market, with shares as high as 17 per cent and 18 per cent in Vaughan, Ont., Regina and Markham, Ont.

Click here to see the full report.