Housing Affordability Crisis in Toronto?
Is there a housing affordability crisis in Toronto? Recent news reports certainly seem to be leaning that way, but is that what’s really going on?
We’re breaking down the stats to look at the Toronto real estate market and what the data has to say about housing affordability.
- It’s now more expensive to buy than to rent.
According to the National Bank’s 2018 Q4 analysis, renting has become cheaper than buying in Toronto.
Analysts from the National Bank found that the price of the representative home (non-condo) in the metropolitan market in 2018 Q4 was $902,916. The household annual income needed to afford the representative home: $165,755.
The price of the representative condo in the metropolitan market in 2018 Q4: $536,082.
Household annual income needed to afford the representative condo: $98,413.
The premium/discount for buying compared to renting a two-bedroom condo in the GTA: 12%.
The months of saving required for the down payment of the representative home (at a saving rate of 10%): 112 months.
The months of saving required for the down payment of the representative condo (at a saving rate of 10%): 49 months.
- Resale activity was down in 2018.
RBC’s economics team found that resale activity slumped almost 16% in 2018 in Toronto. They don’t expect to see a meaningful rebound in 2019.
- Rental availability is at an all-time low.
According to the CMHC, the rental vacancy rate in Toronto dropped to a record low of 1.1% in 2018.
- But rental prices are continuing to increase.
Rentals.ca predicted that in 2019 the average rental rates will increase by 6% year over year on a national basis. In Toronto, the annual rental rate could increase as much as 11%.
The average rent for a one-bedroom apartment in Toronto in February of 2019 was $2,149 — the highest in the country, according to Rentals.ca. The average for a two-bedroom: $2,620.
- Toronto’s position is dropping in national surveys.
Demographia recently released its annual ‘Housing Affordability Survey’ and ranked Toronto as 10th out of 293 cities around the world for unaffordability. In 2017, Toronto held the 21st position.
The 2018 UBS Global Real Estate Bubble Index also ranked Toronto poorly, putting them as having the third worst “bubble risk” in the world.
Looking at the statistics, the question still remains – does this define an affordability crisis?
And, if it does, what is the solution?
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GeoWarehouse’s property data tools can help you navigate housing affordability issues to find the best areas for your clients. Learn more today by calling 1-866-237-5937 or visiting www.geowarehouse.ca.