Here's the income you really need to earn to afford a home in Toronto right now

Even with hardly anyone buying real estate in Toronto lately, the city's home prices remain among the highest in the world, necessitating an unrealistically high salary to afford residential property.

The latest estimates from Ratehub.ca show that you still need a six-figure income to finance a house or condo here despite lowering interest rates and a far cooler market.

But it looks like the drastic slowdown in sales is finally having at least a bit of an effect on our exorbitant prices, with the average place costing $13,300 less in July than in June — the largest month-over-month price drop of any major Canadian city.

Toronto is overrun with homes for sale that no one is buying because prices are still sky-high https://t.co/roZyJt8w1p

— blogTO (@blogTO) July 4, 2024

Based on the city's new average price of $1,097,300, prospective homebuyers will need an annual household income of at least $208,950 to be able to float a 20 per cent down payment and mortgage at the current rate of 5.29 per cent (with a stress test rate of 7.29 per cent).

This is a decline of $5,410 from the salary needed to cover the average home in the city just one month earlier.

As Ratehub notes in its report, published Monday, affordability improved in all 13 cities analyzed — even the ones in which home prices increased — for the first time in months.

This is attributable to the recent cuts to mortgage rates.

Toronto still has a record glut of homes sitting on the market but prices are only going uphttps://t.co/EwwvEMyuPB

— blogTO (@blogTO) August 6, 2024

"Sales have been sluggish in the GTA in recent months as prospective home buyers await further rate cuts before entering the market," the firm states, adding that buyers "aren't yet incentivized to rush in," but likely will be soon.

"As the Bank of Canada is expected to cut its benchmark overnight lending rate into the 3 – 2.5 per cent range by 2025, lazy summer sales could soon be in the rearview mirror... While it wasn't apparent in the July housing data from across Canada, the stage is increasingly being set for the return of a more active housing market."

Some stakeholders forecast that prices in the region to fall more before that time, while others call for quite the opposite by this year's end.