Homes in Toronto are undeniably expensive and out of the financial reach of most young people, with the majority of houses costing well over $1 million — of course, unless you’re privileged enough to receive money from the bank of “mom and dad.”
That said, the recent National Bank of Canada’s Q2-2021 Housing Affordability Monitor report reveals just how bad housing affordability has become in the city, marking the sharpest decline since 1994.
Though income rates and lower interest rates improved the housing affordability index over the past two years, this latest study indicates that is no longer the case, with income growth now outpacing home prices. Mortgage interest rates are also increasing on a quarterly basis according to the National Bank of Canada’s study.
The study also indicates that condo prices increased 5 percent, while the cost of non-condo homes jumped 7.1 percent. Overall, home prices surged 6.9 percent last quarter. Further, home prices in Toronto increased 16 percent annually.
The National Bank of Canada says that the current cost of a home in Toronto that’s representative of the state of the real estate market comes in at $1,146,667. In order to afford a home that costs this much, your household income needs to be in the range of $196,913.
Based on Storeys’ calculations, someone making this amount of money and saving 10 percent of their income would need 318 months to afford the downpayment. When broken down further, 218 months comes to a total of 26 and a half years.
The situation with condos isn’t much better, with the average unit costing $652,308 in the city and requiring a household income of $131,387 and 56 months of savings.