Minimum Income For Home Ownership in the GTA?
A couple of days ago, there was a story on the radio about the minimum household income required to buy a single detached house in downtown Toronto. I'm not sure who performed the study or the purpose of said study as I was busy driving. But the main thing is that the minimum income required was estimated at $250,000 a year.
I guess that makes sense as these houses are selling for well over $1 Million now. The average house price in Toronto was over $1 Million for the first time sometime in 2015. It should only be higher now since there haven't been any stories of a correction or housing bubble bursting.
The report also stated that if you were willing to endure a 30 minute commute, the minimum income required to buy a house in the GTA would only be $150,000. I believe depending on where you lived, 30 minutes is acceptable. My commute is 20 to 30 minutes one way. Of course, they are referring to commuting destination as downtown Toronto. Which likely means a house in Scarborough, Etobicoke, or North York. This makes sense as well as our old neighbours (when growing up), is selling their house now. The listed price was almost $800,000! That's despite the house being strategically placed near a complex for Ontario Housing. Okay, not 100% sure if it's Ontario Housing or Toronto Community Housing. Either way, it's for low-income families.
Finally, the last point of the radio report. If you were to commute 1 hour to downtown Toronto, the minimum income to purchase a house in the GTA was $89,000. Wifey used to commute 1 hour to downtown Toronto by GO Train. If I were to drive, it would likely take up to 90 minutes with the heavy traffic on the DVP. Either way, we're over this $89,000 threshold. Of course, we purchased our house almost 4 years ago when the prices were much lower. Even in our area, it's not likely we can purchase a house for the price we paid in 2012. Maybe we could get a condo, but we'd have to take on more debt if we want to be in this area.
Wifey's co-workers spent more money than we did on a house. They live 80km from the downtown core! In comparison, wifey and I are only 40km from the downtown core. That's twice the distance for more money. Yeesh!
At the end of the report, they interviewed someone who was surprised how much it required to buy a house. Well, surprised was an understatement. She just kept repeating 'No'. The reporter said that the person being interviewed said she would need to triple her salary to afford a house 1 hour from Toronto. Also, mentioned that the person being interviewed was house hunting. Which doesn't make much sense, but these are single detached houses and we don't know if the person is looking for a condo, or if she has a significant other to purchase with.
Anyway, with prices being the way they are, now is the best time to look at your circumstances to see if it might be better to rent or buy. Yes, there are downsides to renting. But there are other downsides to buying. Each person (or family's) circumstances are different. However, everything needs to be considered. Cost of the mortgage vs buying. Condo fees, property taxes, maintenance... people seem to forget maintenance.
It's also important to remember that just because the bank says you can afford this amount of mortgage, it doesn't mean you should take that amount of mortgage. If that's the route you take. Wifey and I took on a mortgage $91,000 less than the financial institution offered because we were comfortable with the payments.
It's important to note that this report likely had some assumptions about consumption and expenses to go with the potential mortgage payments. As a family who spends less money, we're probably able to afford more due to the fact we'd have more disposable income. There are likely some families, despite making $250,000 a year, so cannot afford a $500,000 mortgage due to their lavish, over-the-top, lifestyle.
So remember, yes, it's expensive to own a house in Canada's largest city. But everyone is different, and your circumstances is what determines your chance of home ownership, not some random report on the radio.
I guess that makes sense as these houses are selling for well over $1 Million now. The average house price in Toronto was over $1 Million for the first time sometime in 2015. It should only be higher now since there haven't been any stories of a correction or housing bubble bursting.
The report also stated that if you were willing to endure a 30 minute commute, the minimum income required to buy a house in the GTA would only be $150,000. I believe depending on where you lived, 30 minutes is acceptable. My commute is 20 to 30 minutes one way. Of course, they are referring to commuting destination as downtown Toronto. Which likely means a house in Scarborough, Etobicoke, or North York. This makes sense as well as our old neighbours (when growing up), is selling their house now. The listed price was almost $800,000! That's despite the house being strategically placed near a complex for Ontario Housing. Okay, not 100% sure if it's Ontario Housing or Toronto Community Housing. Either way, it's for low-income families.
Finally, the last point of the radio report. If you were to commute 1 hour to downtown Toronto, the minimum income to purchase a house in the GTA was $89,000. Wifey used to commute 1 hour to downtown Toronto by GO Train. If I were to drive, it would likely take up to 90 minutes with the heavy traffic on the DVP. Either way, we're over this $89,000 threshold. Of course, we purchased our house almost 4 years ago when the prices were much lower. Even in our area, it's not likely we can purchase a house for the price we paid in 2012. Maybe we could get a condo, but we'd have to take on more debt if we want to be in this area.
Wifey's co-workers spent more money than we did on a house. They live 80km from the downtown core! In comparison, wifey and I are only 40km from the downtown core. That's twice the distance for more money. Yeesh!
At the end of the report, they interviewed someone who was surprised how much it required to buy a house. Well, surprised was an understatement. She just kept repeating 'No'. The reporter said that the person being interviewed said she would need to triple her salary to afford a house 1 hour from Toronto. Also, mentioned that the person being interviewed was house hunting. Which doesn't make much sense, but these are single detached houses and we don't know if the person is looking for a condo, or if she has a significant other to purchase with.
Anyway, with prices being the way they are, now is the best time to look at your circumstances to see if it might be better to rent or buy. Yes, there are downsides to renting. But there are other downsides to buying. Each person (or family's) circumstances are different. However, everything needs to be considered. Cost of the mortgage vs buying. Condo fees, property taxes, maintenance... people seem to forget maintenance.
It's also important to remember that just because the bank says you can afford this amount of mortgage, it doesn't mean you should take that amount of mortgage. If that's the route you take. Wifey and I took on a mortgage $91,000 less than the financial institution offered because we were comfortable with the payments.
It's important to note that this report likely had some assumptions about consumption and expenses to go with the potential mortgage payments. As a family who spends less money, we're probably able to afford more due to the fact we'd have more disposable income. There are likely some families, despite making $250,000 a year, so cannot afford a $500,000 mortgage due to their lavish, over-the-top, lifestyle.
So remember, yes, it's expensive to own a house in Canada's largest city. But everyone is different, and your circumstances is what determines your chance of home ownership, not some random report on the radio.
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