Here's how much you need to make to afford a home in Toronto right now
Being able to afford a home in Toronto can already seem like an impossible feat for many aspiring homeowners. A new real estate affordability report from the National Bank of Canada isn’t helping to inspire much confidence.
According to the report, housing affordability in Toronto has decreased even further during the first quarter of 2021. The household salary now needed to buy a typical Toronto home, and the amount of time needed to save for it, could prevent some Torontonians from entering the market for many years.
Potential buyers looking to acquire one of the city’s many condos will need a household income of at least $125,202 to afford the typical condo, which comes with a price tag of $620,291. Assuming someone is saving 10% of their income for a downpayment, the report says that it will take 51 months — or just over four years — to save enough to buy a condo.
When it comes to buying a non-condo, the numbers become even more daunting. According to the report, the typical non-condo home in Toronto is priced at $1,069,111. Based on that average, a household income of $183,594 is needed to afford a downpayment.
But the time required to save for the downpayment — again, assuming someone with that salary is putting aside 10% of their income — is a staggering 297 months, which comes out to just shy of 25 years. This means without a more aggressive savings plan or higher income, Torontonians could be left saving for a good chunk of their adult life.
It is important to note that these income and savings calculations were done assuming a buyer would pay the lowest possible down payment.
In Ontario, buyers are required to pay a minimum of 5% down on the first $500,000 of the purchase price, 10% down for the portion of the purchase price above $500,000, and 20% down for the portion of the purchase price above $1,000,000. So, someone wanting to put down a larger downpayment and avoid having to pay for mortgage insurance could be left saving for even longer.
Compared to other Canadian cities, Toronto’s numbers only come second to Vancouver, where anyone looking to buy a non-condo home needs a household income of $237,201 and 389 months — or over 32 years — worth of savings to buy the typical $1,381,274 home.
So when Toronto is feeling impossibly unaffordable, you can think to yourself, at least it’s not as bad as Vancouver.