High taxes dash home ownership dreams (even with mid-range prices) in Whitby, Oshawa, Ajax

Published February 23, 2023 at 4:28 pm

Never has the dream of becoming a homeowner in Canada felt just like that — a dream.

As homeownership rates declined to a 20-year low back in 2021, potential buyers might still be inclined to postpone ownership plans due to ongoing inflation and out-of-reach home prices. The first year of homeownership, in particular, can be daunting, given the down payment, closing costs, first mortgage payments, homeowners’ insurance, and property taxes — all new to first-time homebuyers.

Homeownership is more doable in some cities than in others: The cost of the first years of ownership in Canada’s most populous cities ranges from $74,342 in Saguenay, QC, to more than five times that in Richmond Hill: $400,733.

Real estate company Point2 analyzed 50 Canadian cities to determine where the first year of homeownership was easier on the wallets of new buyers, using data from upfront costs and annual recurring costs.

Upfront costs include closing costs and a 20 per cent down payment based on local benchmark home prices. Annual recurring costs consist of mortgage (with a 5.86 per cent interest rate and a 25-year amortization period), average property tax, and homeowners’ insurance.

To gain more perspective, Point2 also analyzed how many years it would take for the average renter to save up for the upfront costs required to transition into homeownership, then took calculations a step further to see how many years it would take to cover the full cost of the first year of homeownership.

None of the cities with the most affordable numbers in any of the categories are in the GTA – no surprise – with only Sudbury making any of the lowest-15-in-Canada lists.

And while in many cities it can take five years or less for prospective home buyers to save up enough for a down payment on a new home, it takes buyers in GTA communities 20 years or more.

And even when mortgage payments, which make up the bulk of annual recurring costs, are relatively reasonable, other costs, such as homeowners’ insurance and property taxes can also go a long way in determining how much first-time owners will end up paying during their first year of homeownership. For example, annual costs in Ontario cities Windsor and Oshawa were inflated by property taxes of more than $10,000 (as well as $1,250 in homeowners’ insurance), despite the cities’ mid-range annual mortgages of $33,829 and $49,306, respectively.

Total upfront costs for Oshawa homebuyers, as determined by Point2, was $173,171. Other Durham Region communities were slightly higher, including Whitby at $220,387 and Ajax at $209,551.

Seventeen cities had upfront costs exceeding $200,000, led by Richmond Hill at $304,649, Markham ($291,567), Oakville ($286,705), Vaughan ($280,123) and Vancouver at $256,775.

For total first-year costs, Richmond Hill topped this category as well and was the only community exceeding $400,000. The rest of the top five is Markham ($383,469), Oakville ($378,122), Vaughan ($369,051) and Vancouver ($331,63).

With high property taxes plaguing homeowners in Whitby and Ajax, as well as Oshawa, total first year costs in those communities were $295,730 (Whitby), $280,939 (Ajax) and $234,508 (Oshawa).

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