How much money do you need to make to afford a home in Toronto in 2023?
House hunters looking to buy a home in Toronto need to make over $200,000 per year to crack into the market, according to new housing data.
Ratehub.ca, an online mortgage brokerage service, looked at data reported by the Canadian Real Estate Association (CREA) and compared the required income needed to buy a property in 10 major cities across the country – including Toronto and Hamilton – from January of 2022 to January 2023.
“Home prices are down, but affordability is worse than 12 months ago,” James Laird, Co-CEO of Ratehub.ca and President of CanWise mortgage lender said in a release.
The report notes that while Toronto is known for having one of the priciest housing markets in the country, the city came seventh in terms of worsening affordability.
Even though average home prices plummeted by over $178,000 since last January, those looking to buy property in Toronto need to make at least $207,000 a year to crack into the market – a $7,620 rise in required annual income.
The Bank of Canada has been steadily raising key interest rates since March 2022, causing strain on prospective homebuyers in qualifying for a mortgage given how high borrowing and stress test rates are, the report notes.
“With current fixed rates, the stress test is currently around 7.37 [per cent], which is over 2 [per cent] higher than a year ago. The increase in rates is more material than the decrease in home values so far, which means homes are less affordable in nine out of 10 of the cities we looked at compared to a year ago,” Laird said.
Hamilton is the only city to see an improvement in housing affordability over the last year.
On a year-over-year basis, average home prices dropped by over $200,000 in Hamilton, going from $1,012,700 to $809,800 in 2023 – the largest decline of all cities, the report notes.
As a result, the minimum income required to buy a home in the city – based on a 20 per cent down payment for a mortgage with a 25-year amortization period – decreased by $4,350, with prospective homebuyers needing to make at least $159,100 per year in 2023.
As per the report, until the Bank of Canada’s next policy rate announcement on March 8, real estate market analysts are unsure of how everything will play out in the coming months, given how unaffordable housing is.
“Early 2023 feels a lot like 2019, where after a year in which it became much harder to qualify for a mortgage, everyone was wondering if the market would pick up in the spring,” Shaun Cathcart, CREA’s Senior Economist, wrote in the report.
“In 2019 the market started off slow, as there wasn’t much to buy. It took off once spring listings started to come out. With the Bank of Canada increasingly signaling that rates are now at the top, it’s possible the spring market this year could also surprise, particularly in areas where prices have been stable or are now stabilizing.”
CTVNews.ca Top Stories
Police arrest 3 Indian nationals in killing of B.C. Sikh activist Hardeep Singh Nijjar
Three people have been arrested and charged in the killing of B.C. Sikh activist Hardeep Singh Nijjar – as authorities continue investigating potential connections to the Indian government.
Grandparents killed in wrong-way crash on Hwy. 401 identified
A 60-year-old man and a 55-year-old woman killed in a wrong-way crash on Highway 401 earlier this week have been identified by the Consulate General of India in Toronto.
Quebec man who threatened Trudeau, Legault online sentenced to 20 months in jail
A Quebec man who pleaded guilty to threatening Prime Minister Justin Trudeau and Premier François Legault has been sentenced to 20 months in jail.
TD worst-case scenario more likely after drug money laundering allegations: analyst
TD Bank Group could be hit with more severe penalties than previously expected, says a banking analyst after a report that the investigation it faces in the U.S. is tied to laundering illicit fentanyl profits.
Canadian doctor concerned new weight-loss drug Wegovy may be used inappropriately
As Wegovy becomes available to Canadians starting Monday, a medical expert is cautioning patients wanting to use the drug to lose weight that no medication is a ''magic bullet,' and the new medication is meant particularly for people who meet certain criteria related to obesity and weight.
Biscuits with possible plastic pieces, metal found in ground pork: Here are the recalls for this week
Here are the latest recalls Canadians should watch out for, according to Health Canada and the Canadian Food Inspection Agency.
Britney Spears 'home and safe' after paramedics responded to an incident at the Chateau Marmont, source tells CNN
A source close to singer Britney Spears tells CNN that the pop star is 'home and safe' after she had a 'major fight' with her boyfriend on Wednesday night at the Chateau Marmont in West Hollywood.
Local MP, MLA call on federal government to remove sunken vessel in Saint John River
An MP and an MLA are calling for the removal of a sunken vessel in the Saint John River.
Human remains found in rural Sask. possibly a decade old, RCMP say
RCMP say human remains found in a rural area in central Saskatchewan may have been there for a decade or more.