Even though there’s little hope of Toronto real estate prices ever lowering to remotely reasonable levels, the latest survey of average home costs — with current selling prices, interest rates, property taxes and more taken into account — shows that properties in the city have gotten slightly more affordable over the summer.
Ratehub.ca crunches the numbers each month to determine what someone would need to earn per year to be able to purchase the typical T.O. home, and in August, softer interest rates made home ownership just a bit easier in most Canadian cities, including in the 6ix.
While prospective buyers in places like Montreal and Regina saw affordability improve even while the cost of a home rose from one month to the next, Toronto saw both the most considerable drop in average home price and in the salary needed to finance a home. However, we remain the second most expensive city on the list.
As of August, the standard house or condo in the city costs about $1,082,200, which is $15,100 lower than in June. With mortgage and stress test rates also falling month-over-month (from 5.29 and 7.29 per cent to 5.16 and 7.16 per cent, respectively), the income required to become a homeowner fell $4,850 over the same time period to $204,100 annually.
Chart of how home prices and the salary needed to buy a home has changed from July to August 2024 courtesy of Ratehub.ca.
Though this signifies movement in the right direction, especially given July’s figure was itself a small decrease from June’s, it is still a lofty amount that many of us would only dream of raking in. And, Ratehub.ca’s experts expect the trend to turn in the near future, anyway.
“Real estate activity remained sluggish in August, particularly in Canada’s largest markets, which softened home prices and helped improve overall affordability,” the report reads.
“But the real estate market is poised to heat up in coming months as further rate cuts, and newly-announced mortgage rules for first-time buyers, come into effect. While this will improve affordability conditions for Canadians, it will also likely push real estate prices higher, as sidelined buyers return to the market.”
The company’s calculations are based on a mortgage with 20 per cent down payment and 25-year amortization, plus $4,000 in annual property taxes and $150 in monthly heating bills.
