It’s a common narrative that real estate can be prohibitively expensive in Canada’s biggest urban markets. However, a new data report reveals just how out of reach homeownership can be, even for city residents earning a living wage.
Numbers compiled from Zoocasa find that house buyers in Toronto and Vancouver need to satisfy the highest financial thresholds to afford the benchmark home. In the GTA, only those within the top 10 per cent would qualify for a mortgage for the benchmark single-family home at $873,100. The income requirements are even more rarified in the west coast city, as buyers must be among the top 2.5 per cent of income earners to purchase a house at the benchmark price of $1,441,000.
The data also highlights the concerning trend of eroding affordability of condos – typically the entry point for first-time buyers – in these markets; buyers must still be within the top 25 per cent to purchase the benchmark unit, at a price of $656,900 in Vancouver and $522,300 in Toronto.
The good news: income thresholds became much more inclusive in several of Ontario’s secondary housing markets, as well as across Canada’s bread basket. Regina was an especially affordable standout, with 75 per cent of local income earners able to afford a house priced at $275,900, while those within the upper 50 percentile in Saskatoon and Winnipeg are within reach of houses priced at $301,900 and $326,433, respectively.
Condo buyers also enjoy widespread affordability in these cities, with units in all three locales accessible to the top 75 per cent income group at benchmark prices of $160,200, $170,800 and 227,538.
To determine the income percentile local home buyers would need to be within, the study sourced benchmark sold home prices for 13 Census Metropolitan Areas (CMAs) from CREA. It then applied a mortgage calculation, assuming a 20-per-cent down payment, 3.75-per-cent mortgage rate and amortization of 30 years, to find the minimum income required to qualify for a mortgage for each home price. Those numbers were then cross referenced with income tax filings as reported by Statistics Canada.