For many people, owning a home in Toronto is already a pipe dream, but according to a new analysis from the National Bank of Canada, it’s even more out of reach than they might imagine.
The bank recently released its Q3 Canadian Housing Affordability Monitor, which indicated that in order to afford the average non-condo property, valued at $1,195,744, a household would need a very high yearly salary of $205,342 and a stunning 330 months’ worth of savings – or 27.5 years.
To arrive at these figures, the National Bank of Canada anticipated that a buyer would set aside 10% of their annual wage for a downpayment and would pay the minimal amount required.
In Ontario, buyers are obliged to put down a minimum of 5% on the first $500,000 of the purchase price, 10% on the fraction of the purchase price above $500,000, and 20% on the portion of the purchase price above $1,000,000. As a result, someone who wants to put down a larger downpayment and avoid paying mortgage insurance may have to save even longer.
In Toronto, the salary and months of savings required to buy a condo are significantly lower, although they are not always feasible. The example condo is now priced at $669,593, and with a $134,726 income, it would take 58 months of saving – or just under five years – to be able to afford it, according to the analysis.
In comparison to other Canadian cities, Toronto’s stats are only second to Vancouver, where a non-condo property requires a household income of $267,641 and 432 months – or 36 years – of savings to purchase the average $1,558,535 home.
So, as exorbitant as Toronto is, we can at least console ourselves by knowing that it isn’t as astronomically expensive as Vancouver.