Thinking of browsing homes for sale in London, Ontario? Here’s some news that’ll put a smile on both existing homeowners’ and prospective buyers’ faces: while home values have surged by double digits across the region, the salary required to buy a home is still below actual earnings in the region, making the London area one of the most affordable in southern Ontario.
Recent data compiled by Zoocasa finds home prices have shot up between 11 – 24% year over year across the Elgin, London, Middlesex, Strathroy and St. Thomas regions. However, unlike pricier markets located within the Greater Golden Horseshoe, a buyer earning the median household income would still be able to afford the average-priced home in any of these counties.
Incomes Are In Line With Rising Home Prices
To calculate how home prices compare to incomes, Zoocasa crunched the minimum income required to qualify for a mortgage for the average-priced home in each area (as reported by the London St. Thomas Association of Realtors), assuming a 20% down payment, a mortgage rate of 3.33%, and a 30-year amortization. That amount was then compared to the actual median household income earned in each region, according to Statistics Canada.
The findings reveal that buyers in London East with the median household income in the city of $62,011 will find themselves in the most comfortable financial position when perusing houses for sale, earning 46% more than they’d actually need to purchase the average-priced home of $311,954, despite values increasing 25% from 2017.
That’s followed by the St. Thomas market, where median-income earners of $61,888 would have a 44% surplus on the average-priced home of 315,464, which rose 12% from last year.
Rounding out the most affordable top three is Strathroy, where the median income is $66,123, 37% higher than what’s needed to qualify for the average $354,854 home, which increased 23% year over year.
London an Affordable Option for Ontario Home Buyers
That’s in sharp contrast to the priciest Ontario markets; in nine throughout the province, buyers actually face a steep income gap between earnings and average home prices. For example, those trying to purchase a home in Richmond Hill on the median household income would fall short by $47,972, followed by Toronto with a gap of $41,282.
As well, London buyers benefit from relatively low land transfer tax – unlike the City of Toronto, there is no municipal LTT, and the majority of average home prices fall below $368,000, meaning many first-timers will not pay for this closing cost altogether.
Check out the infographics below to see how real estate affordability ranges throughout the London, Ontario region.
Average home price is sourced from the London St. Thomas Association of Realtors. The salary required is based on a 20% down payment, a mortgage rate of 3.33% and a 30-year amortization and was calculated using the Ratehub mortgage calculator (https://www.ratehub.ca/mortgage-affordability-calculator). Carrying costs such as property taxes and heating were not included. Median household incomes are sourced from Statistics Canada.