Canada’s top cities to buy real estate in

The best city to buy in is a steal compared to Toronto

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Guelph has topped the list as the city with the most attractive real estate for buyers in Canada, according to the 2017 MoneySense Where to Buy Now ranking. In doing so, it bumps Thunder Bay from the perch it had held for two consecutive years, knocking that city down to fourth spot.

This year’s ranking is released as concerns about Canada’s housing market took on a new sense of urgency. One by one in the span of a few days bank CEOs, governments and economists have expressed their discomfort with what they see unfolding in the housing sector. A report showing Toronto home prices surged 33% year-over-year in March served as an expensive exclamation point.

This feeling of unease is being echoed by another unlikely source—realtors. While there is a perception that agents love a frothy market, many of the ones we connected with have reservations as they watch their clients pony up for homes they know to be grossly overpriced.

What is often overlooked is how localized these challenges are. Take the GTA and Vancouver out of the equation and you have a vastly different looking housing market. In some cities, homes listed on a Thursday are sold by Tuesday; in others, they can sit for weeks if not months.

No market is completely devoid of challenges, but some are in a much better position to withstand a downturn. The one that grabs our attention this year is Guelph, which appears to have one of the healthiest real estate markets in Canada.

Gallery: Top 35 cities to buy real estate in »

Homes in Guelph go for about $441,000, which is more than four times the average household income. Relative to markets like Saint John, Thunder Bay or Moncton, this Southwestern Ontario city certainly isn’t cheap, but in the shadow of Toronto, this is what passes as affordable.

Still, as important as affordability is, cheap house prices alone don’t make for a healthy housing market. A strong housing market should offer some income potential, sustained price growth, and a strong economy to support it. Guelph excels in each of these areas. These are the factors that drive the Where to Buy Now rankings.

Economically, Guelph is on solid and stable footing with a minuscule unemployment rate. It’s home to advanced manufacturing companies, green tech firms, while also supporting several high paying government and education jobs.

Real estate investors looking in this market will appreciate how tight the rental market is in the city. Rents have risen 20% over the past five years while they city’s vacancy rate is below 1%, meaning investors should not have to work very hard to find a tenant.

Finally, home owners can take some comfort knowing the value of their homes continues to rise, up 16% in 2016. More importantly, unlike Toronto and Vancouver where a shortage of listings is putting upward pressure on prices, the market in Guelph is more balanced.

Outside of Guelph, some cities continue to surprise us. The fact Vancouver remains in the top 10 would appear to be surprising. Certainly, the city earns no points for affordability, but the strength of its underlying economy, market momentum and the earning potential more than makes up for this. The vacancy rate in the city sits at just 0.7%, which has been a factor in the 23% jump in rental rates over the past five years.

The top 35 cities to buy real estate

  • Rank City Average home price (2016) Average rent to average home price ratio Average income to home price Home sales to new listings 1-year price change 5-year annual ROI 10-year annual ROI Average 5-year rent increase Discretionary income levels Average GDP growth 2010 to 2014 Projected GDP for 2015/2016 Current Unemployment rate (2016) Previous year's unemploment rate (2015)
    1 Guelph (Ont.) $441,880 0.63 4.4 86.1 16.7% 6.8% 5.5% 20.0% $50,114 2.2% 2.3% 4.7% 4.1%
    2 Durham/Oshawa (Ont.) $528,475 0.54 4.9 81.6 20.2% 10.9% 7.4% 21.5% $52,653 2.2% 2.3% 6.0% 7.6%
    3 Brantford (Ont.) $335,584 0.73 4.0 86.2 14.5% 7.0% 5.3% 18.5% $44,648 2.2% 2.3% 6.1% 5.8%
    4 Kitchener - Cambridge - Waterloo (Ont.) $387,235 0.69 4.0 83.2 11.2% 5.2% 5.0% 20.9% $48,099 2.2% 2.3% 5.6% 5.8%
    5 Thunder Bay (Ont.) $219,249 1.06 2.6 68.3 1.5% 5.9% 6.0% 24.9% $47,446 2.2% 2.3% 6.8% 5.0%
    6 Hamilton (Ont.) $490,486 0.53 5.2 83.6 10.8% 8.0% 6.8% 20.9% $48,934 2.2% 2.3% 6.1% 5.5%
    7 St. Catharines - Niagara (Ont.) $342,342 0.70 4.3 84.9 16.4% 7.0% 4.9% 17.2% $42,600 2.2% 2.3% 6.6% 6.8%
    8 Vancouver (B.C.) $1,017,228 0.32 10.4 69.0 12.7% 5.5% 7.2% 22.9% $49,785 2.9% 2.2% 5.5% 5.9%
    9 Peterborough (Ont.) $325,795 0.76 3.9 77.5 9.4% 5.1% 4.3% 10.8% $42,117 2.2% 2.3% 5.2% 7.6%
    10 Windsor (Ont.) $221,432 0.91 2.8 73.7 12.6% 5.9% 3.0% 12.7% $42,442 2.2% 2.3% 6.4% 9.9%
    11 Regina (Sask.) $313,903 0.88 3.0 49.0 1.1% 2.5% 9.0% 26.2% $57,272 2.4% 1.9% 5.3% 4.3%
    12 Winnipeg (Man.) $284,610 0.87 3.2 60.3 2.3% 3.3% 6.3% 29.2% $46,130 2.3% 2.0% 6.5% 6.0%
    13 Toronto (Ont.) $753,528 0.43 7.0 72.6 21.1% 9.3% 7.5% 18.3% $52,653 2.2% 2.3% 7.0% 7.1%
    14 Victoria (B.C.) $585,745 0.45 6.3 83.7 12.3% 3.3% 3.2% 14.5% $47,348 2.9% 2.2% 5.3% 5.7%
    15 Barrie (Ont.) $438,828 0.68 4.5 74.1 17.6% 8.8% 6.0% 20.2% $48,506 2.2% 2.3% 7.8% 6.9%
    16 Kingston (Ont.) $306,849 0.93 3.3 48.3 4.6% 3.2% 3.8% 22.2% $48,139 2.2% 2.3% 5.8% 6.8%
    17 London (Ont.) $279,634 0.87 3.2 68.5 5.4% 3.7% 3.9% 15.2% $45,645 2.2% 2.3% 6.9% 6.5%
    18 Abbotsford - Mission (B.C.) $676,946 0.33 7.7 72.6 17.2% 6.1% 5.6% 14.2% $46,155 2.9% 2.2% 6.7% 6.2%
    19 Kelowna (B.C.) $461,791 0.56 5.0 74.6 13.1% 4.0% 3.6% 18.1% $48,432 2.9% 2.2% 8.0% 5.0%
    20 Charlottetown (P.E.I.) $178,489 1.24 2.3 58.3 9.1% 3.4% 3.6% 21.1% $38,987 1.5% 1.3% 10.8% 10.5%
    21 Greater Sudbury (Ont.) $252,484 0.95 2.7 50.0 4.2% 1.9% 5.3% 16.1% $50,670 2.2% 2.3% 8.1% 7.2%
    22 Ottawa (Ont.) $373,719 0.78 3.5 52.9 1.1% 1.7% 3.8% 13.0% $53,837 2.2% 2.3% 6.4% 6.4%
    23 Québec (Que.) $264,427 0.78 3.3 49.4 -0.3% 1.5% 5.0% 15.9% $42,812 1.5% 1.6% 4.6% 4.8%
    24 Edmonton (Alta.) $369,365 0.81 3.1 48.2 0.0% 2.6% 3.9% 20.3% $64,350 2.5% 2.3% 7.2% 5.8%
    25 Halifax (N.S.) $286,878 0.91 3.4 52.8 1.5% 2.1% 3.6% 18.2% $40,827 0.3% 1.2% 6.2% 6.3%
    26 Saskatoon (Sask.) $338,738 0.80 3.2 37.1 -1.2% 2.4% 7.8% 19.2% $54,821 2.4% 1.9% 6.8% 5.6%
    27 Calgary (Alta.) $463,047 0.65 3.4 54.6 2.0% 2.8% 2.9% 20.9% $74,240 2.5% 2.3% 9.1% 6.2%
    28 Moncton (N.B.) $167,328 1.21 2.1 48.5 2.3% 1.1% 2.7% 16.0% $40,660 0.2% 0.9% 7.2% 6.9%
    29 Trois-Rivières (Que.) $158,571 0.94 2.4 58.4 -0.3% 0.3% 3.2% 9.3% $36,157 1.5% 1.6% 7.1% 6.5%
    30 Gatineau (Que.) $245,149 0.80 2.3 46.3 0.3% 1.1% 3.6% 6.9% $53,837 1.5% 1.6% 6.9% 7.2%
    31 St. John's (Nfld.) $256,989 0.90 2.7 36.9 -6.7% 0.3% 6.3% 26.9% $48,965 0.0% 0.2% 7.6% 6.3%
    32 Sherbrooke (Que.) $235,996 0.68 3.4 51.1 -3.5% 1.9% 3.5% 11.3% $36,895 1.5% 1.6% 6.2% 6.9%
    33 Montréal (Que.) $349,549 0.58 4.4 55.5 3.6% 2.5% 4.2% 11.9% $39,253 1.5% 1.6% 7.8% 8.4%
    34 Saint John (N.B.) $168,221 1.09 2.1 44.7 2.8% -0.3% 2.8% 11.7% $42,195 0.2% 0.9% 8.0% 8.1%
    35 Saguenay (Que.) $180,904 0.82 2.5 45.3 0.1% 0.4% 4.7% 9.1% $40,655 1.5% 1.6% 8.0% 8.0%

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