Single Detached homes a pipe dream for some
Toronto housing rose 188% but Average household Income only rose less than .40%
Source: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil108a-eng.htm * Toronto Real Estate Board *2015, 2016 Income date extrapolated from historical and forecasted inflation rate no Statscan Data available
In 2001, average home price was $250,906.00 and in 2016 (ending November 2016) was $723,625.00. This represented a rise of 188% in housing price. This illustrate the increase not only in demand for Toronto housing but to the value of the homes. There was a short plateau in the 2008-2009 period then the housing market took off again. All these time the interest rates was slowly declining with a slight pullback in 2006-2007 then it just went downhill from there. With the declining interest rates making money a cheap commodity and bond yield low, people need a safe new vehicle to invest and hence the real estate was the darling all investment vehicles. On the other hand the average Ontario household income was at $58,400 in 2001 to $79,263.45 for 2016 (extrapolated from inflation). This represents an approximately .036% increase in average household income. The numbers are showing a scenario that cannot be sustained in the long term.
In February 2016, Royal Bank Economics Research on Housing Trends and Affordability wrote that “Toronto- affordability moving ever closer to risky levels.” Buyers are confident to pay premium prices for single-detached homes due to the low interest and good employment rates. There has been a rapid rise in home prices since the late 2014 fueled by the sellers demand for higher prices and bidding wars. Average home prices in Toronto moved from $563,620.00 in 2014 to $723,625.00 up to end of Nov 2016. This reflects an incredible increase of 28.39%. The condo market is not doing badly either with a 4.4% year over year in the fourth quarter from 2015. The consolation to this madness is condo ownership is still affordable for most average Ontario households but the dream to own a single-detached in Toronto is rapidly floating away for most people.