According to a new report by RateHub, Canadians will need to earn more to be able to buy a home compared to last year, despite home prices dropping in many parts of the country.
For example, in Toronto, homebuyers will need an annual income of $217,000 as of March 2023 to afford a $1,118,500 home, which is $6,250 higher than what was needed in March 2022. Homebuyers in Vancouver will also need to earn over $200,000 to afford a home, while the rest of the country requires between $75,000 and $170,000.
The increase in mortgage rates also pushes up the required income needed to pass the stress test to be approved for a loan.
The report found that homebuyers need to earn between $5,650 and $21,360 more in annual income to afford a home than they did last year for nine out of 10 Canadian cities, and this trend is expected to worsen.
Homebuyers may need to consider small cities to find more affordable deals.