Buying a house in Toronto is no easy feat, and according to a new report from the National Bank of Canada, you now need almost $200,000 in annual household income to afford it.
The National Bank of Canada released its quarterly Housing Affordability Monitor on Tuesday and, unsurprisingly, found that housing affordability has worsened across the country. The typical mortgage payment now eats up 45% of household income.
And compared to every other major market in the country, affordability in Toronto dropped by the greatest amount.
In Toronto, a typical house that’s representative of the current real estate market is priced at $1,146,667. To afford this home, a buyer needs a household income of $196,913 and would — assuming a saving rate of 10% — have to have saved up for 318 months. That’s 26 and a half years.
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And if you’re thinking buying a condo would be more attainable, it is, but only relatively speaking. The representative condo in Toronto is priced at $652,308. And to afford that, you’ll need a household income of $131,387 and 56 months’ savings.
Mortgage payments in Toronto are taking up even more of homeowners’ paycheques. For non-condo owners, it’s costing them 65.6% of their income, which is up 5.4% from the previous quarter. For condo owners, it’s 37.3% of their earnings, up 2.4% quarter-over-quarter.
“Income growth and lower interest rates were conducive to improving affordability for most of the past two years,” the report reads. “That is no longer the case in 2021, as income growth is being easily outpaced by home price increases, while mortgage interest rates also rose on a quarterly basis.”