A down payment on a Toronto house should take 24 years to accumulate

A National Bank report suggests you need to make $178,499 annually and save for 289 months to accumulate the down payment

The average Canadian would have to save for 24 years to afford a down payment on a house in the Toronto real estate market. That, according to a National Bank report, assumes a household annual income of $178,499.

The National Bank report, Housing Affordability Monitor, pegs the price tag for an average non-condo home in the Toronto real estate market at $1,039,438 – or 30.5 per cent above the national average. The report assumes that a household earning the necessary six figure salary would have to save for 289 months at 10 per cent rate in order to accumulate a six per cent down payment.

In December, the average price for a semi-detached home in the 416 area was actually $1,160,108, with detached houses at $1,475,758, according to the Toronto Regional Real Estate Board (TRREB).

According to the National Bank report, there has “never been a worse time to accumulate the minimum down payment,” across the country.

The report refers to the record high house prices nationally and the lowest available down payment option sitting at six per cent. The report, by  Kyle Dahms and Camille Baillargeon, also points out that the higher incomes and record low interest rates don’t alleviate the situation because they are offset by the jump in home prices.

“The nearly 100 basis points decline for rates since the start of the pandemic is surely propulsion for the current appreciation in home prices,” says the report.

The report also adds that while housing affordability deteriorated in the Toronto real estate market for semi-detached, detached and town homes, there was an improvement on the condo scene during the fourth quarter of 2020.

The average Toronto condo costs $615,805 according to the report. The average for the 416 was $625,828 in December according to TRREB. National Bank says you need a $124,335 household income to afford the condo and accumulating a down payment at the 10 per cent savings rate will take 51 months – or just a little over four years.

Housing affordability also improved across Canada in the fourth quarter. Calgary, Winnipeg, Vancouver, Edmonton and Quebec eased up a bit.

However, Vancouver is house prices are still sky high, averaging $1,342,184 for non-condo properties. If you want to get in on that market, National Bank suggests a household income is $230,488 and setting aside 34 years to save up the down payment.


Brand Voices

3 responses to “A down payment on a Toronto house should take 24 years to accumulate”

  1. Thank you for you great column,
    I could not agree with you more, the price of real estate in Canada is out of control,. Since the 2000s the cost of homes have been increasing, but since the 2008s short reduction in prices, the cost of homes have been increasing over 10% a year! In 2017, shortly after introducing foreign tax, its been increasing like there in no tomorrow. As my friend a real estate agent said, the bigger you buy the more profit you make, this is the mentality! I think it has been win win opportunity for every one, for the banks governments, the construction companies, real estate agents and those who work in industry! And now no control the prices, no matter what, the prices have to increase 10 to 15% year, not even the pandemic and lock down and 20 to 30% of workers out of job dose not bring the prices down, at least it seams!
    I bought my house in 1999 for 186 thousand, i paid just over 8k to get the key, including my down payment. Now people have to pay 180k for a downpayment as you mentioned. Even if you are able to purchase a house now, the house will be a huge burdon on you, not a peace of mind. When i see in US people buy homes for 50k or 80k, and i compare it to our prices, it gives you a numbing feeling, our real estate agents charges fifty thousand Dollars to sell the house, why shouldn’t they try the home prices to keep going up and up, legally or illegally, why wouldn’t the hole corporation want the price keep on increasing.
    I believe our government has to take this very seriously, it can bring down the hole country’s economy and its credit market for many many years such as Ireland, Iceland or Greece or Spain, so it is a very serious matter. Thank you!

  2. When the Ford and Trudeau Gvt(printing new debt on Canadian’s credit card) stops paying Toronto’s taxes by transferring billions$$$$ to a broke Toronto gvt, taxes will need to double and eventually triple. Like Chicago and Detroit and dozens of other cities this will drive 100,000s from the city, adding to the 100,000s already fleeing the congested streets and roads and viral TTC system for more affordable and cleaner living. The other financial blow will be the tax revenue that disappears when the Trudeau and Ford gvt stops subsidizing commercial rents and stops the CEWS program where employee wages are paid by the federal gvt.

  3. Am I reading it right? So, this report states that to buy a condo 615k selling price, you will need to save for 51 months.

    Simple math, total down payment 62k
    Months as per this report 51 months
    So, technically a household with 125k annual salary is saving just 1200$ every month! Lol

Leave a Reply

Your email address will not be published. Required fields are marked *

NOW Magazine