“Canada’s New York City” has been turning heads in recent years thanks to its burgeoning residential real estate market. Demand for homes in Toronto has been white-hot and on the rise for almost two decades now – so much so that it unflinchingly withstood the pitfalls of the most recent recession.
This steady and aggressive climb has led to a housing market that bears a shocking price tag: the last time that Toronto homes were this unaffordable, it was the 1990’s, and a housing bubble was on the cusp of bursting.
These days, if you want to scoop up a humble condo in Canada’s financial epicentre, you’ll need to shell out upwards of $500,000 on average, backed by a household income (HHI) of over $90,000. However, those figures can’t even hold a candle to the price of a detached home, which will run you an average of $1.15 million – that would require an HHI of $200,000 if you want to afford your $4,349 mortgage every month.
While Toronto’s housing affordability issues are admittedly dwarfed by notoriously pricey cities like Vancouver, Manhattan, and San Francisco, it still earned 13th place on the North American list of least affordable metros, ranking in the “seriously unaffordable” category.
Of course, in these situations, it’s only a matter of time before a critical chunk of buyers get priced out of the market. And that time might just be now.
Compared to last year, the price of a detached house in the GTA has plummeted by 46.3 per cent, potentially marking the prophesied popping of the city’s swelling housing bubble. Year over year, the only type of home to rise in value was condos, which gained 6.1% from 2017 to 2018. The rest had a much rougher go of things: the value of detached houses tumbled by 17.1%, and townhouses’ value decreased by 9.5%.
Understandably, this slip in home prices has caused current homeowners to become cagey about selling – many of them are being dubbed “stubborn sellers,” waiting for prices to jump back up to their 2017 heyday before putting their real estate on the market.
While these stubborn sellers wait for prices to recover, many have already moved on to their next home, leaving an estimated 28 per cent of properties for sale completely vacant – a phenomenon that is often seen in housing markets that are recovering from an unsustainable surge, and one that might just be the harbinger of Toronto’s long-awaited real estate cool-down.