Looking to buy a first home in Toronto?
It seems as though it was just yesterday, I was working at the branch and discharging mortgages for clients in the east-end part of Toronto, Ontario. In performing my regular duties, I would always look at the original mortgage amount and the total interest paid during the 25-year term amortization, and fundamentally understood why large financial institutions were so profitable in the mortgage industry. But honestly, in 2017, the ability to enter into the housing market in the city of the Toronto, seems to be truly unaffordable for the average working professional.
In an August, 2016, article in the Toronto star by Tess Kalinowski, a study published by TheRedpin, found that it takes at the very least, a six-figure income to afford a house in the Greater Toronto Area. An average income of $124,153 would be required by a mortgagee, to qualify for the purchase of a condo or detached home, inclusive of property taxes and utilities in the GTA. There was, however, an exception with respect to Durham region, where a yearly salary of less that $100k could net you a starter home. With a household income of about $76,057 per year, one could afford to live in an area such as Brock near lake Simcoe. It did have the lowest priced real-estate in the region outside of Toronto proper, averaging around $ 373,269.
York region, in the King Township had the highest priced homes on average, coming in at $1.208 million in the first few quarters of 2016. For the same period, homes in Richmond Hill averaged around $1.066 million. The average household income needed to purchase a house in Richmond Hill would work out to about $180,000 according to TheRedPin. To put this in terms of a monthly mortgage payment, your outlay each month for your Richmond Hill home would work out to $3818. The average Canadian making an average salary, would seemingly be out priced in these neighbourhoods in York region. The housing structure in these areas predominately seem to be detached and semi-detached homes at this time.
For those earning less than $100,000 per year, there are cities, such as Oshawa and Clarington in the region of Durham that seem to be affordable. The average price of a home in this region comes in just over $400,000. Back in the day, during my days at the bank, these cities were viewed as “out in the sticks” and considered too far from Toronto, in the event you had to make the daily commute to the city for work. Fortunately, the GO Train does offer a convenient mode of transportation to Union station in the city of Toronto. This form of transportation of getting into the city from your home, in my opinion, is proving to be a viable option for those who see the value of living outside the Greater Toronto Area.
- In the township of King: The average price $1,208,094; household income required $205,525
- In the city of Richmond Hill: The average price $1,066,569; income required $179,551
- In the region of Oakville: The average price $995,666; income required $168,871
- In the area of Markham: The average price $960,118; income required $161,662
- In the township of Aurora: The average price $941,068; income required $162,741
- In the region of Vaughan: The average price $921,714; income required $156,731
- In Whitchurch-Stouffville: The average price $920,463; income required $157,688
- In the region of Caledon: The average price $768,988; income required $136,641
- In the township of Newmarket: The average price $761,080; income required $134,605
- In the township of East Gwillimbury: The average price $753,054; income required $132,365
- In the city of Toronto: The average price $736,932; income required $124,126
- In Uxbridge: The average price $729,755; income required $134,712
- In Burlington: The average price $678,401; income required $118,893
- In the township of Milton: The average price $629,536; income required $108,246
- In the city of Mississauga: The average price $620,606; income required $109,560
- In Pickering: The average price $599,267; income required $113,595
- In Whitby: The average price $574,506; income required $109,671
- In Brampton: The average price $570,380; income required $105,743
- In Ajax: The average price $568,342; income required $108,207
- In Clarington: The average price $459,464; income required $90,141
- In Oshawa: The average price $427,790; income required $87,801
- In Brock: The average price $373,269; income required $76,057
Source: TheRedPin (the Toronto Star: https://www.thestar.com/business/2016/08/12/buying-a-home-in-the-gta-requires-a-six-figure-income.html)
In this study, TheRedPin used averaged home prices, based on the Toronto Real Estate Board statistics and factored in utility costs including taxes. The average selling prices included all homes, such as condos, detached, semi-detached and townhomes. The study also assumed a down payment of twenty percent on the home price, at 2.49% interest rate and a 25-year amortization.
In my opinion, the concept of home ownership is a wonderful thing, however, at what cost? There are always additional costs associated with maintaining and running a home, which are not always factored into the bottom line. Consider having to replace a faulty furnace or the necessity of installing and/or servicing an air-conditioning unit(southern Ontario summers can have weeks that exceed 30 degrees Celsius on a regular basis). In many cases, you may have to consider a new roof for your home, which can easily run you over 5k. Taking into consideration painting, drive way maintenance, insulating the attic and or basement – one will need to budget accordingly.
For all of your second mortgage and mortgage refinancing needs, please contact me, your dedicated mortgage agent, via my contact details below.
Victor Kaushal.
victor@bestrefinance.ca
416-895-6074
