Buying a home in Canada is a realistic endeavour for most people, as long as you don’t want to live in Toronto or Vancouver.
The latest housing affordability report from the Royal Bank of Canada (RBC) says markets in those two cities are drastically different from others across the country.
“Single-detached home affordability in Toronto continues to slip deeper into stressful territory for homebuyers,” the report says. “Any further deterioration in affordability would entrench these segments as ‘luxury’ forms of housing … available only to wealthy households.”
Stefan Zangov, a 32-year-old professional who lived in Toronto his entire life until last year, had experienced this problem.
“Cost of living was the biggest factor when I decided to leave,” he says. “If I have to spend more than half of my income on housing, it’s no longer practical to live in the city.”
Rather than buy in the city, Zangov chose to rent — in Hamilton — and commute to his job in downtown Toronto.
“I miss the city, but I don’t see myself moving back,” he says. “I make an upper-middle-class wage and even with that I can’t afford to buy in Toronto. Even to rent, it would be three times what I’m paying now for the same space.”
— RBC (@RBC) June 22, 2015
In Toronto, it costs the average person 71.4 per cent of pre-tax income to buy and maintain a detached house. Condominiums are much more reasonable, at 36.7 per cent.
“Current market conditions suggest that housing affordability in Vancouver and Toronto will stay on a deteriorating path in the near term,” says Craig Wright, chief economist at RBC and one of the authors of the report. “Sellers are very much in control of both markets and prices are likely to continue to rise rapidly in the coming months.”
RBC uses estimates based on the average income levels of people living in a certain market in comparison with the average price of homes.
The report says levels of unaffordability in Toronto haven’t been this high since 1990.