FP Answers: Where is the best value in Canada for real estate?

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In an increasingly complex world, the Financial Post should be the first place you look for answers. Our FP Answers initiative puts readers in the driver’s seat: you submit questions and our reporters find answers not just for you, but for all our readers. Today, we answer a question from Brian about real estate.

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Canadian real estate has soared in value since 2020, with the pandemic, low interest rates and fear of missing out (FOMO) propelling home prices to record levels and pricing many potential home buyers out of the market.

Although the Canadian Real Estate Association (CREA) reported home sales fell by 5.6 per cent in June from the month before, the national average home price was only down 1.8 per cent to $665,580 from the same month last year, despite rising interest rates and tighter borrowing conditions today.

Elevated prices in Toronto and Vancouver continue to drive the high national average, but many smaller neighbouring cities offer more affordable prices. You can still find value in real estate if you know exactly where to look.

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Zoocasa Realty Inc. analyzed 25 regional housing markets and ranked every market by its annual rate of growth in average home prices. The online broker then determined where the average price stood compared to the national average, and identified the 10 most affordable regions and homes you can buy there.

The Saguenay, Que., region tops the list for most affordable housing, with an average home price of $267,353 and annual price growth of 6.6 per cent from last June. Newfoundland and Labrador, where the average regional home price is $280,200 with an annual growth of 10.8 per cent , came second. Saint John, N.B., holds third spot, with an average home cost of $294,900 and an annual growth rate of 30.1 per cent.

Zoocasa spokesperson Patti Cosgarea said she was surprised by how many markets are below the national average. Canadians should continue to see prices decline as the Bank of Canada raises rates.

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Some people may choose to wait on the sidelines as the market slows in the face of rising rates, CREA chair Jill Oudil said in the association’s June statistics report.

But should potential home buyers wait for prices to drop even further in case a dramatic decline in the housing market plays out?

Not according to Prof. Jill Grant who researches housing and cities at Dalhousie University’s School of Planning in Halifax. Grant predicts that housing will not return to pre-pandemic levels soon because of a lack of supply.

Canadians are forming more households as families get smaller and more people live alone, and housing supply in Canada has not kept up with that demand, Grant said.

No one can predict how high interest rates may rise nor the resulting decline in home prices. But since prices have fallen from their February highs, and supply remains tight, now may be as good a time as any to buy a new home.

• Email: rshelton@postmedia.com | Twitter: robms4