Certain Canadian cities may prove to be more vulnerable to rising interest rates and falling home values
As real estate values fall and interest rates rise, there are certain provinces and cities that may be harder hit in a real estate downturn. As an example, Milton seems to have the deck stacked against it.
Milton, Ontario has the most mortgage holders in Canada, with 79% of owner households.
The surge in interest rates over the past year has impacted Milton significantly, with food bank usage spiking and panic over approaching mortgage renewals.
Much of the growth in Milton has been in the form of semis, townhomes and condos rather than single family homes.
The young population of Milton is particularly vulnerable to increases in housing costs, like rising mortgage payments, due to having more debt and less equity in their homes.
Variable mortgages have become popular, with variable rates starting as low as 1.5% in January 2021, but now can be higher than 5%, and they now make up one-third of total outstanding mortgage debt nationally.
Many people who bought homes in Milton couldn't really afford them to begin with and are now struggling to keep up with mortgage payments.
Milton has an average household income of $138,800 a year, with an average home price of $1.06 million in February 2023, down 24% from last year.
“They could afford so much because their money was almost free.”
See the full story here: https://www.thestar.com/news/gta/2023/03/04/why-this-town-is-ground-zero-of-canadas-rising-mortgage-crisis.html
