Toronto's housing affordability crisis just hit the worst level in the city's history

Toronto's housing market may have slowed down last year due to high interest rates, but as the city starts to see the gradual return of buyers, affordability is at an all-time low.

Economists at RBC provided a pretty discouraging update on the nation's real estate landscape overall this week, saying that it is now the toughest time in history to afford a home in Canada.

Bidding wars have returned as the GTA's housing market heats back up https://t.co/bduvUF8S5s

— blogTO (@blogTO) March 6, 2024

Of course, residents in the country's most infamously pricey cities have it the worst, with experts writing that while affordability worsened in all markets coast to coast, "Vancouver, Victoria and Toronto experienced the biggest deterioration, further exacerbating acute stress."

"Skyrocketing interest costs continue to significantly challenge Toronto-area buyers — many of whom confined to the sidelines, unable to clear the extremely high ownership bar," the report says.

It adds that the measure the bank uses to track affordability levels in various cities reached "its worst level ever" at the tail end of 2023, reaching 84.8 per cent — which is the amount of income the average household would need to devote to a mortgage and other home ownership costs if they want to buy.

This is how much you need to earn to afford a house in Toronto right now https://t.co/y7eAUEAC4h

— blogTO (@blogTO) March 20, 2024

"The immense burden this represents ultimately restrains home resale activity to historically low levels and weighs on prices," it continues, noting that while lending rates are on the way down and home sales numbers in the region are picking up again, "it will take several rate cuts to unlock pent-up demand in a material way."

And, once that pent-up demand is unleashed, fierce competition will likely bring back bidding wars and cause prices to surge even higher.