You need to save for 25 years to afford the down payment on the average house in the Toronto real estate market, according to the National Bank’s latest Housing Affordability Monitor.
The report assumes a household income of $183,594 and the purchase of an average non-condo home costing $1,069,111, which is approximately what a Scarborough bungalow is currently listed for. With a 10 per cent savings rate and perhaps accounting for price increases in the time it takes to save a down payment, the Housing Affordability Monitor estimates 297 months to accumulate what’s needed to become a homeowner in the Toronto real estate market.
In the previous Housing Affordability Monitor, National Bank calculated the average home to cost $1,039,438, assumed a slightly lower household income at $178,499, and estimated it would take 24 years to save for the down payment.
The new report published on May 4 says housing affordability in Canada got worse in the first quarter of 2021, experiencing the sharpest deterioration since 2018.
“Rising incomes were outpaced by surging home prices,” says the report, which expresses further concern now that mortgage rates are starting to increase from historic lows. A few months ago customers were landing fixed rates around 1.5 per cent but now the best rates are hovering around two per cent.
Condo affordability in the Toronto real estate market eased up in the first quarter of 2021 the report states, though it pegs the average price at $620,291, which, according to current listings, can get you a one-bedroom downtown and maybe another bedroom in Scarborough, North York or Etobicoke. At that price, a household that earns $125,202 annually could afford the down payment in a 51 months, or a little over four years.
The bad news is the most recent prices in the Toronto real estate market are higher than the Housing Affordability Monitor estimates.
According to the Toronto Regional Real Estate Board (TRREB), the average selling price for a condo across the city in April was $727,137, eight per cent higher than the month before. Condos were more affordable in the 905, though still six per cent higher than March, averaging $612,341. That brought the Greater Toronto Area condo average to $691,791.
Detached homes in the city averaged $1,699,756, while they nabbed about $1,308,185 in the 905. Semi-detached homes averaged $1,308,799 in Toronto and $925,938 in the 905, while townhomes sold on average for$ 942,371 and $831,152, respectively.
Toronto real estate prices were up more than 20 per cent year-over-year in all segments, except for detached homes. Those were up around 40 per cent. But the good news is that non-condo house prices started to cool in April.
As the latest COVID-19 lockdown took hold, transactions slowed and the prices for detached and semi-detaches homes in Toronto real estate market pulled back for the first time since in a year. The average detached home price in Toronto was only up $631 from March to April while the 905 saw that figure drop a marginal $3,414. The figures for semi-detached and townhomes flatlined in similar ways.
“We’ve experienced a torrid pace of home sales since the summer of 2020 while seeing little in the way of population growth,” says TRREB president Lisa Patel, in a statement. “We may be starting to exhaust the pool of potential buyers within the existing GTA population.”
If things can stay put for a while, you might even be able to afford a home sooner than 25 years.