Most Affordable Cities in Ontario for First-Time Home Buyers in 2022
Affordability in home buying is more than looking for the cheapest price. Making an affordable choice involves checking as many boxes as possible that matter to you: lifestyle fit, ideal location, the average income in the region, unemployment rates, and price all combine and average out to create an index. With home prices rising 17.7% year over year in December 2021,1 you may think that scoring affordable homes in Canada is a runaway train at this point.
But there is still hope! Especially with reports like the Affordability Index from Desjardins. This is an index that measures the ability of households to purchase a home and assume related costs. The goal is to help assess the risks in the housing market and anticipate major variations in the price of homes.
But where are the most affordable homes in Ontario? Using the Affordability Index, let’s look at the data across the province to help first-time home buyers plan an affordable purchase.
Unemployment rate: 6%2
We will use the province of Ontario to frame the data.
The Desjardins Affordability Index works using a 250-point scale. The higher the number, the more affordable the region is. According to the data below, in Q3 of 2021, Ontario was 4.3 points less affordable than the previous quarter and 11.8 points less affordable than the previous year.
The average sales price for Ontario in Q3 of 2021 was $871,150, an 18% increase from the previous year and a 3% increase from the previous quarter. As the average sales price and ownership costs go up, the average household income decreased in Q3 of 2021, which in turn made conditions slightly less affordable overall.
In Ontario, three regions are standouts for their affordability above the provincial average: Sudbury, London, and Windsor. These cities are evolving and boasted growing commerce and lifestyle fits across 2021.
Let’s look at the data.
In comparison to the Ontario average index (87.9), Sudbury (147.3) was a whopping 59.4 points more affordable in Q3 of 2021. Average ownership costs and average sales price increased since Q3 of 2020, but average household income after tax dropped. This contributed to less affordable conditions in the region compared to previous months, but still far more affordable than the provincial average. Outside of Thunder Bay, Sudbury posted the highest score on the Desjardins Affordability Index amongst Ontario regions.
Unemployment rate: 5.7%3
The average sale price for a Sudbury home in Q3 of 2021 was $377,876, a 3% decrease from the previous quarter and an 18% increase from the same quarter last year. In addition, the unemployment rate was virtually on par with the provincial average.
Why is this region affordable?
Overall, the price of a home in Sudbury was almost $500,000 less than the provincial average. But that’s not the only thing that makes this city affordable. According to livingcost.org, the average cost of living in Greater Sudbury is $1,405, which is 119th out of 153 in Canada, and 38th out of 43 in Ontario.4 Sudbury also offers a wealth of cultural, historical, and educational opportunities.5 There is abundant access to over 300 lakes and low-cost recreational activities like trail walking, hiking, kayaking, biking and more. Large, cost-effective, panoramic properties are everywhere and there is something for everyone.
Combined with a low unemployment rate below the provincial average and a high average household income after tax ($84,030), Sudbury is a great place to find affordable homes in Canada for first-time home buyers.
In comparison to the Ontario average index (87.9), London (100.7) was 12.8 points more affordable in Q3 of 2021. Just like Sudbury, average ownership costs and average sales price increased since Q3 of 2020, and average household income after tax dropped. This has again contributed to less affordable conditions in the region compared to previous months, but still more affordable than the provincial average.
Unemployment rate: 5.7%6
The average sales price for a home in London was $632,183 in Q3 of 2021, a 1% increase from the previous quarter and a 22% increase from the same quarter last year. In addition, the unemployment rate is slightly less than the provincial average.
Why is this region affordable?
Overall, the price of a home in London was over $200,000 less than the provincial average. Like Sudbury, it has a reasonable cost of living. The average cost of living in London is $1,564, which is 50th out of 153 in Canada and 21st out of 43 in Ontario.7 But other factors make London great.
London has access to Western University and Fanshawe College. Affordable housing will always be a priority in regions that have a large student population. The central location within the Tri-City region provides easy access to larger cities and small towns. There is a wealth of entertainment, arts, culture, parks, nightlife, and restaurants to choose from.8 In addition, it’s a growing metropolis that offers big-town amenities with a small-town feel.
Combined with a low unemployment rate below the provincial average and a higher average household income after tax than Sudbury ($86,030), London is another great place to find affordable homes in Canada for first-time home buyers.
In comparison to the Ontario average index (87.9), Windsor (104.0) was 16.1 points more affordable in Q3 of 2021. Just like Sudbury and London, average ownership costs and average sales price increased since Q3 of 2020, and average household income after tax dropped. Once again, this contributed to less affordable regions across 2021 but still more affordable than the Ontario average.
Unemployment rate: 8.1%9
Why is this region affordable?
Overall, the price of a home in Windsor was over $300,000 less than the provincial average. Like Sudbury and London, it has a reasonable cost of living. The average cost of living in Windsor is $1,507, 107th out of 153 in Canada, and 32nd out of 43 in Ontario.10 Let’s look at other factors that make Windsor a great place to find affordable homes in Canada.
Windsor is located just a short 10-minute drive from Detroit and residents can experience cost-effective activities of both American and Canadian culture. They can visit Detroit museums and restaurants, then come back home without breaking the bank. Windsor also has its music theatre, and the Hiram Walker Distillery.11
While Windsor does have a higher unemployment rate than the provincial average, its growing population of 210,000 residents, proximity to U.S. commerce, and solid average household income of $78,308 make it an affordable destination for first-time home buyers.
Ontario is usually a good barometer for the rest of the country, as tight conditions across major markets like Toronto, Hamilton, and Ottawa represent some of the least affordable conditions for home buyers. But there is more space for growth in Ontario in burgeoning markets like Sudbury, London, and Windsor. The Desjardins Affordability Index indicates that these regions are far more affordable than the Ontario average.
Sudbury was the second most affordable region in Ontario featured in the report, only slightly less affordable than North Bay. But as stated previously, affordability is not only about price. So, while the data may point to North Bay, the region has far fewer cultural, commerce, and lifestyle opportunities compared to the regions featured. London and Windsor followed Sudbury with affordability scales above the 100th percentile. They also offer affordable living costs with access to culture, commerce, and recreation.
For the first-time home buyer, finding affordable homes in Canada may involve shifting expectations from the flash and frill of the big cities. Instead, a cost-effective choice that produces an enjoyable living environment might be more suitable.
In shifting markets like these, the guidance provided by a local REALTOR® can’t be overestimated. A FairSquare Group Realty agent will provide you with the latest market data to help you buy or sell at the right price, plus, buyers receive $2,000 cash back* and sellers save thousands in commission! Let us help you reach your real estate goals. Call 1-855-999-9740 to speak to an associate today.
1 CREA Stats Canada 2021
2 YCHARTS - Ontario Unemployment Indicators
3 CREA - Sudbury Unemployment Trends
4 Living Cost - Greater Sudbury
5 Greater Sudbury - Arts, Culture, and Heritage
6 Global News - London Jobless Rate
7 Living Cost - London
8 Culture Mile - London
9 CTV News - Windsor Unemployment Rate
10 Living Cost - Windsor
11 New Canadian Life - Pros and Cons of Windsor