Vancouver is one of the most expensive Canadian cities in which to own property, and has been viewed as a much more expensive place to live than Toronto, but it looks like that could be changing.
The Greater Vancouver Area is Canada’s least affordable housing market. However, as you may have already expected, Toronto is quickly catching up.
Of course we would be the runner up in affordability to the most expensive Canadian city for property ownership! Apparently, Toronto can’t catch a break in real estate.
Housing affordability is measured by the percentage of the median household income in the area in question required to cover all mortgage payments, utility costs, and property taxes on a home. It is calculated and determined by banks or other financial institutions involved in real estate. However, we will specifically be referencing a recent report released by RBC.
According to this report, it takes 92% of median household income to cover the necessary costs of homeownership in the Vancouver area. This has gone up a whole 2.2 percentage points since just last year, which is the highest reading on record for any major Canadian housing market.
Oh, and just for your reference, the national average is currently sitting at 44.3%.
Like all housing markets, single detached houses are the most costly and unaffordable housing type, initially and over the course of ownership. Condos are less expensive to both purchase and maintain, and range at slightly more affordable prices depending on the typical aspects – size, location, amenities, etc.
According to the Real Estate Board of Greater Vancouver, The Greater Vancouver Area will see a single detached home sell for an average of around $1.5 million and condos averaging at about $550,000.
But enough about the West coast! Let’s get back to the important issues.
Meanwhile, in the Greater Toronto Area, housing affordability currently sits at nearly 64%, declared by the same RBC report on measuring affordability. This rose a whole 3 percentage points from the same time last year and is the greatest increase of any Canadian housing market. Toronto and the GTA haven’t had this high of an affordability percentage since 1990 when our market peaked.
For the first time, another housing market has surpassed that of Vancouver’s in regards to affordability that is eroding faster than the polar ice caps are melting.
With Toronto’s affordability taking a major nosedive, we may be catching up to Vancouver in this competition – but this is definitely not a race we want to win. Toronto is a close second as affordability for property ownership decreases.
This may lead you to question what you can do about this situation. Not to estate the obvious, but let’s get real! Call your real estate agent Raymond Yong! Contact The Raymond Yong Real Estate Group in Toronto at (416) 906-9863 or firstname.lastname@example.org.
There is hope on the horizon despite this affordability crisis seeming so daunting.
New mortgage rules were recently released that may assist with this situation, although this likely won’t be too helpful in the immediate future. Insured mortgage applications must now qualify at a higher lending rate, ensuring that homeownership is a less costly endeavor to start with, but will cost more over time. This will take some time to take effect and could actually cause short term issues for first time homebuyers.
Affordability gained through new rules could also mean more expensive long-term interest rates, meaning that your monthly costs are bound to increase, which will effect this half of the equation that calculates affordability in your area.
Mortgages in Toronto and Vancouver are especially affected by these rules and with our out-of-control affordability rates. Even though we’re based in the Greater Toronto Area, where affordability is slightly more attainable than the Greater Vancouver Area, there are still downfalls when it comes to purchasing a home.
Toronto’s housing market produces a brutal competition that requires you to entertain bidding wars and quick decisions, whether you are buying or selling.
This may seem particularly intimidating, but the benefits to ownership far outweigh the initial struggle of getting into the market – another point we can discuss with you if you just give us a call!
And if all else fails, you can always look into different housing markets than Toronto’s. The most affordable of these 14 markets is currently in Saint John’s, so if you’ve ever dreamed of retiring in the Maritimes, now is your time to buy!