Toronto catching up to Vancouver for most unaffordable real estate market, says RBC
Toronto homeowners spending 63 per cent of their income on housing costs
Toronto is inching closer to Vancouver when it comes to house prices — specifically, according to a Royal Bank of Canada (RBC) study, how unaffordable it is.
RBC's third quarter affordability index shows that 63.7 per cent of the typical household income in the Greater Toronto Area is being funneled into the cost of owning a home, which includes mortgage payments, the principal and interest, property taxes and utilities.
That's three per cent higher than it was last quarter, according to the bank. Toronto homeowners haven't had to set aside this much income to maintain a home since the spring of 1990.
Vancouver remains the most costly city in the country to own a home, with 92 per cent of the average household income needed to pay ownership costs.
No downward pressure on prices
While Vancouver's market appears to be softening since the city rolled out a tax on foreign buyers, there's not slowdown ahead in the GTA, said RBC Senior Economist Robert Hogue.
"That proportion of household income is likely to continue to rise simply because prices are going to continue not only to rise in Toronto but at an accelerating pace," he said.
Hogue said one of the biggest reasons prices continue to climb is that there's simply a lack of houses for sale.
At the end of last month, there were 15,184 new homes built — 84 more than in August which was the lowest level on record reported Building Industry and Land Development Association.
The lack of supply hasn't discouraged buyers from shopping for real estate during typically slow months, like December.
"I've been actually quite busy with people looking to get in the market next year," said real estate agent Mike Prior.
"They've heard that historically speaking December, January, February might be the best months to buy because historically the prices are lower."
The Toronto Real Estate Board said homebuyers are frustrated by the lack of listings in the city this month. That led to overall year-over-year price growth of 20.3 per cent last month, while detached home prices climbed 32.3 per cent during that period in the city to an average of $1,345,962.
"If you have prices continue to rise at a rapid rate, I think pressure would be sustained on policy makers to consider measures to cool the market down or to help affordability," said Hogue.