Salary needed to buy a home has dropped in Toronto
It may be one of the worst times in years to try and sell a home in Toronto, but conversely, those in the market to buy a property may be able to land themselves somewhat of a deal (relative to the city’s infamously ludicrous prices, that is).
Prices are finally starting to erode in the face of a terribly stagnant market, most notably in the condo sector, where fewer units are changing hands than ever in the last three decades.
According to the latest data from the Toronto Regional Real Estate Board (TRREB), the average price of the typical GTA condo fell 2.6 per cent from March 2024 to the month prior, while the average price of a home of any type is down a similar 2.5 per cent over the same period.
Sales have dropped a staggering 23.1 per cent year-over-year, while active listings have shot up 88.8 per cent, giving buyers the advantage of choice and negotiating power.
As such, along with a Bank of Canada mortgage rate cut in March, the annual income needed to buy a home has decreased in the city and other places across Canada. It’s a reversal of recent months, when this figure has been rising, rather than falling, at least in the nation’s biggest city.
In T.O., the median home price dove $5,400 from February to March ($1,073,900 versus $1,068,500), based on the company’s data, while lending and stress test rates fell two per cent. This pushed the minimum average household income needed to afford a place down $4,190 per year, from $221,200 to $217,010 total.
The numbers come from Ratehub.ca, a broker that calculates it each month based on fluctuating home prices, interest rates and stress test rates. The benchmark takes into account a 10 per cent down payment, 25-year amortization, plus $4,000 yearly in property taxes and $150 monthly in heating bills.
Chart from Ratehub.ca
Even in some cities where home prices are still rising, the firm found that the benchmark amount necessary to float the standard mortgage lowered from February to March of this year. Only three of 13 cities examined saw the salary required rise.
While this is good news for would-be homeowners in the 6ix, looking at the stats for the rest of Canada may have you questioning why you would ever want to settle down in Ontario, as you would need to rake in less than half the money to buy a house in somewhere like Regina (where the average home price is a mere $326,300, necessitating earnings of $76,600 per year for a mortgage) or Fredericton ($335,900 price/$78,420 a year).
“In the Golden Horseshoe-region markets specifically, where home sales have slumped due to tariff fears, the combined impact of lower home prices and lower mortgage rates have improved affordability even further,” the site’s experts say in sharing their most recent research.
“Toronto saw a big change based on lower home prices and mortgage rates month-over-month. The borrower in this scenario would save $121 on their monthly mortgage payment — $1,452 per year — in March compared to if they bought in February. Securing a lower rate like this has a big impact on how much you can qualify for.”