A new housing report has painted a characteristically bleak picture of the housing affordability scene in Toronto, determining that it would take a person just under 25 years to afford a down payment on the average home in the city — and that’s with an income of $230,923.
The report by the National Bank of Canada found that, at a savings rate of 10 per cent of pre-tax income, it would take 297.2 months, or 24.7 years, to save enough for a down payment on a home in Toronto. That’s based off of a median home price of $1,137,570, equalling a down payment of $227,514. However, the qualifying annual income to be able to make those savings is $230,923 — more than double the average household income of $97,000 in Toronto.
For non-condo units in the city, it’s a similar story: you would need a household annual income of $236,221 to afford the average home at a cost of $1,163,670, taking 304 months or approximately 25 years to save up.
For condos, the statistics are slightly less grim: at a household income of $165,220, you would need to save for 58 months, or almost five years to afford the average condo at $695,691.
The numbers are harsh, but the facts are even worse — according to the report, this represents an improvement in overall affordability. The mortgage payment as percentage of income (MPPI), measured as the monthly payment on a median-priced home assuming a 25-year amortization period and a 5-year term, declined 4.6 per cent to 82.8 per cent in the GTA in the first quarter of 2023. Among non-condo units, the MPPI declined 5 per cent to 84.7 per cent, while among condos it declined 2.1 per cent to 50.6 per cent.
“The quarterly improvement of the composite index stemmed from a 2.6% decline in home prices combined with a 1.4% increase in income and a slight decrease in interest rates,” the report reads.
That being said, the MPPI in the GTA is still well above the historical average for the city at 51.4 per cent and above the urban composite at 60.9 per cent — and is up 7.5 per cent on an annual basis.
With reports like this one, it’ll be no surprise if Torontonians start getting scared off to cities like Montreal or Calgary (where it would take just over three years to save up for a down payment on a home).