By: Penelope Graham, Zoocasa
Love may be in the air, but that doesn’t go very far in the Greater Toronto Area real estate market – and affordability is even more dire for single home purchasers, according to new data compiled by Zoocasa.
In fact, paying off a condo in the GTA region on one income requires more than double the recommended shelter expenditure – even in the markets considered most affordable for home buyers.
My Achey-Breaky Budget
This is based on the home-price-to-income ratio in each municipality; using the Toronto Real Estate Board’s average January 2018 condo price data and the median household income from Stats Can determines just how long it would take to pay off a home using an entire years’ salary. Sage financial advice pins this ratio at three years – but that’s simply not possible for solo homeowners in the GTA. According to the numbers, said buyer would need a minimum of seven years to pay off a home located in the most affordable markets of Milton and Clarington.
While houses for sale in Toronto remain firmly out of financial reach, downtown city condos presented the steepest high rise affordability challenge for singles, with Toronto Central setting solo homeowners back a whopping 16 times their income. Condos for sale in Mississauga are also a tall order, at 10 times the median household earnings.
To find out which GTA regions offer solo buyers the greatest affordability, check out the infographic below.
Tips for Improving Affordability
While the numbers may appear discouraging, single buyers need not flee the housing market – there are a few ways to offset hefty mortgage costs and reap the benefits as a homeowner.
1 – Purchase a home with an income suite: Have your heart set on a detached or semi-detached home, but stuck on a condo budget? Adding an income-generating legal secondary suite can go a long way in qualifying for a mortgage, as the Canada Mortgage and Housing Corporation (CMHC) now allows 100 per cent of rental profit to be considered when assessing affordability.
2 – Try short-term renting your home: While new rules passed by Toronto City Council last year mandate only principal residences be rented out short-term, there are still opportunities for condo and house owners. If possible, try renting a spare room in your unit, or advertising your home for short-term rental while on vacation.
3 – Shop around for the best mortgage rate: Getting financing at a competitive rate can save literally tens of thousands of dollars over the course of a mortgage. Work with a mortgage broker before house hunting to find the best mortgage product from a variety of lenders, and confirm your affordability with a pre-approval before putting in any offers.
