Affordability in Toronto is officially at an all-time low
Home sales and home prices have both been rising steadily since the latter half of 2019, with the Toronto Regional Real Estate Board forecasting an average overall sale price increase of close to 10 per cent this year, up to at least $900,000 by the end of 2020.
Futhermore, if detached homes continue to sell as well as they are, TRREB says that average prices could soar "well past the $900,000 mark" this year. RE/MAX similarly expects average home prices in Toronto to hit a whopping $933,691 in 2020.
The housing market in Toronto is starting to look a lot like it did in early 2016 warns a new report by RBC Economics Here are the stats and graphs: https://t.co/KW3tUk7Jse #REINON @reincanada #toronto #ONre— Don R. Campbell (@DonRCampbell) February 10, 2020
That's a remarkably fast rebound period, by any measure — too fast, say some analysts, for comfort.
"It's looking more and more like early-2016 all over again for the Toronto housing market. This is not a good sign," reads an RBC Economics report published last week.
"Supply—of existing and new homes—will be key to what happens next in Toronto's housing market," the report continues. "If it stays low, prices will likely keep ramping up beyond the next couple of months. Worse, if supply shrinks even further, prices could spiral upward like they did in 2016 and early 2017."
The major difference between 2017 and now is that condos used to be a lot cheaper than detached homes. This is no longer the case.
People need to realize that affordability in this city ain’t coming back. Nobody can save enough money to keep up with appreciation. Toronto has been appreciating at 7-8% annually. Conservatively speaking, that’s $50k a year. https://t.co/98oSN5rrJP— tycoon (@terrilewisinc) February 12, 2020
"While affording a home remains a difficult proposition in the single-detached market, robust price growth in recent years has also eroded condo affordability to a massive extent," notes TD economist Rishi Sondhi.
Median condo prices in Toronto are up a staggering 60 per cent since the end of 2015, according to TD, leaving buyers who may at one time have been able to afford sky property without any options aside from renting.
"Beyond this factor, the demographics of the region should support activity, particularly as the population of those aged 25-44 (which captures most first-time homebuyers) has increased sharply in recent years," writes Sondhi, speaking to an increase in demand for all types of units.
"Survey evidence points to first-time homebuyers tapping family and friends for down payment assistance to a growing extent, which should help them tackle affordability challenges."
In other words, home ownership in Toronto is becoming less affordable than ever before — unless you can take out a serious chunk of cash from the Bank of Mom and Dad.
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