Homebuying

Middle-class families are priced out of owning homes in every single Toronto neighbourhood

By: Lisa Coxon on July 8, 2019

There are 140 neighbourhoods in Toronto, and middle-class families don’t earn enough to buy a home in any of them, according to an analysis of MLS sales data by the Toronto Star.

The income required to buy a “median-priced single-family house” in all of Toronto’s neighbourhoods is “tens of thousands of dollars more than what a typical median-income family living there earns” — and that’s even when a 20% down payment is applied to the purchase of the home. 

It’s worth noting that for this analysis the Star relied on 2015 income data from Statistics Canada, and then compared it against 2018 home prices, so this could create some slight discrepancies as it wouldn’t take into account any income gains made in the past few years.     

Still, the findings are striking and reiterate the trouble that Torontonians find themselves in when it comes to home ownership.

A report released in January from the City of Toronto’s Affordable Housing Office revealed that “At current housing price levels, median-income renter households would require between 11 and 27 years to save for a 10 percent down payment on a median-price home.”

The Star analysis found that in Toronto’s most affordable area — Mount Dennis — which is near Weston Rd. and Eglinton Ave., a homebuyer would need to make more than $100,000 a year in order to afford a mid-priced home of $616,500.     

And, according to Statistics Canada data from 2015, that’s double what a typical family living in Mount Dennis earns.

Contrast that with what’s needed in one of Toronto’s most lavish neighbourhoods, the Bridle Path-Sunnybrook-York Mills neighbourhood, where an average-priced single-family home runs for $3.98 million, and the household income required jumps to $655,487, plus a 20% down payment. Mortgage payments on such a home would be more than $19,000 a month.

Experts have speculated for some time now that wealthy foreign buyers have contributed to the housing affordability crisis in Toronto.

There’s certainly data to back that up, like the joint project between Statistics Canada and the Canada Mortgage and Housing Corporation that revealed non-resident-owned properties had median prices that were tens of thousands of dollars higher than resident-owned properties. But foreign buyers aren’t the only explanations being made about what’s behind high housing costs in Toronto. 

John Pasalis, a Toronto realtor and founder of real estate firm Realosophy, told the Star that he thinks the foreign buyers aren’t as widespread as suggested and only affected areas like York Region.

Pasalis says it’s more likely that we have domestic investors to thank for Toronto’s housing bubble.

“People were refinancing their homes, taking $200,000 or $300,000 out of their primary residences to use as a down payment on an investment property,” says Pasalis.

“About seven years ago you could buy a semi-detached house in Leslieville with a finished basement and parking for just over $600,000,” says Pasalis. “Today, that same buyer with the same budget is getting a one-plus-den condo.                        

“It’s a huge difference.”

 

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