When it comes to buying a home, one standard is to aim for a property priced at approximately four times your annual income or less.
Unfortunately, for many Canadians, it's becoming increasingly harder to follow this rule as property values continue to soar and outpace incomes in the process. Just this week, new data has confirmed that buyers need at least $1M to buy a detached home in 97% of the GTA.
In other words, your childhood was a lie.
That said, the headline of this piece -- and the data that backs it up -- doesn't even touch upon the recent pandemic-induced housing boom, which saw housing prices become all but untethered from reality. No, the period we're referencing, in which average housing prices increased by roughly 115% in the Toronto region, while median income only increased by 25%, was for the 10-year period between 2008 and 2018.
In the three years since, housing prices in the GTA have only moved faster. In July 2018, the average cost of a home -- across all housing types -- in the GTA was $782,129. In July 2021, that average price reached $1,062,256. That's a further 35.8% increase for anyone out there interested in trying to keep up with The Joneses.
And this rising cost in housing isn't just limited to the price of detached homes in wealthy neighbourhoods or any other outlier; in fact, during that same 10-year period between 2008 and 2018, average “rent increases doubled wage increases”.
While market activity continues to cool from its “extreme” and “unstable” levels in March of this year, prices have yet to make a serious correction. Furthermore, the rental market is again on the up-and-up, and has already become intense enough to cause bidding wars.
With a federal election just a month away, housing affordability will be a major pillar of each party's campaign. And it's no wonder: If housing prices from 2018 to 2028 mimic the same rise they saw in the ten years prior, by 2028 the average price of a home -- across all types -- in the GTA would be approximately $1.7M.
All the more reason to make an informed decision this September: