If the past year of insanely high home prices hasn’t made you rethink home ownership, maybe this new report will.
Two real estate companies conducted separate studies and have come up with the income requirements if you are looking to afford a home in Toronto. The results don’t seem to benefit Canada’s millennials.
A majority of millennials out there, approximately 59% of those aged 25 to 30, would like to own a detached house in 5 years. Well, sorry to burst your bubble, but according to research by TheRedPin, the annual income needed to afford the average detached house in Toronto ($1.15 million) is a whopping $200,663 with monthly mortgage payments of $4,349 (based on 20 per cent down, 2.99% mortgage, amortized over 25 years).
A condo does not give millennials much hope either, with the average price being $576,000, you’d need an income of $92,925 to carry payments of $1,933 a month, plus tax, utilities, and condo fees.
While these numbers start to slowly change, people in their late 20s are going to continue to face affordability issues compared to their parents. While cities like Toronto provide the best opportunity for employment for young adults, they result in being the most expensive markets to own property. Going outside of the city to live and work may seem like the better option, but it is still relatively expensive:
- Buyers need more than $150,000 a year to cover the cost in half of 22 Toronto area municipalities
- Oshawa needs an annual income of $108,773 to afford an average home of $552,268
- King Township needs $264,000 a year to afford $5,883 in mortgage payments with an average price of $1.6 million
Many young adults looking to escape their family home, stop paying rent, and find a place to call their own, cannot afford to put a down payment on a condo or house. Nearly 25 per cent have looked to family for assistance on a down payment. Even though that number is quite low, it may continue to grow with the rate the market is going. It isn’t as easy to afford housing as it used to be.
If you are in need of a real estate lawyer, please visit our website and contact one of our real estate lawyers today. If you are in need of any other services or have any questions, you may also contact our Toronto office directly at 416-449-1400.
By: Nicolas Di Nardo