Ontario Real Estate Largely Unaffordable for Median Income Buyers: Study

Real Estate News / Wednesday, October 9th, 2019

By: Zoocasa

Homeownership in Ontario cities is largely out of reach for households making the median income, with the only exception being Ottawa, according to a recently released report by Zoocasa.

The study assessed 15 Canadian cities to see how affordable it would be for the median-income household to purchase a property. The numbers reveal that buyers making the median income would have to save up massive down payments in order to qualify for a mortgage to buy Ontario real estate.

The calculations assume a mortgage rate of 3% over 25 years, with 1% of the purchase price devoted to property taxes and another $100 a month toward heating, and assumed buyers could save 20% of their income annually.

Toronto Among Least Affordable for Median-Income Buyers

Toronto was, unsurprisingly, the most unaffordable city in the province. There, a median-income household would only qualify for a mortgage of $300,174. But with average property prices at $802,400, such buyers would need to make up the difference with a 63% down payment of $502,226. That down payment would take a full 32 years to save, based on stashing away 20% of the median income of $78,373.

 Even Smaller Secondary Markets Out of Reach Financially

Hamilton and Kitchener, smaller urban centres in the province, were no better. Houses for sale in Hamilton are at an average of $613,900 while household incomes are only $74,464. That means buyers would only qualify for a mortgage of $310,732, leaving them on the hook for 49% of the purchase price to be paid in cash. That would take the median family 20 years to save up — unaffordable and unrealistic by any measure.

Similarly, houses for sale in Kitchener are slightly lower at $528,990 while incomes are slightly higher at $77,229. But it would still take 13 years to save up a big enough down payment. While 13 years is certainly better than 32 years, it’s not affordable — by the time a household had saved up enough funds, the market would have risen far, far beyond their reach. It’s a game of catch up that buyers just can’t win.

Ottawa, Prairies, Remain Feasible for Median-Income Buyers

In contrast, Ottawa remains affordable. In the capital city, home prices are just under $500,000 and salaries are high, at $86,451. Borrowers would qualify for a mortgage of $396639 and would only have to put forth an 11% down payment of $46,887, which would take a reasonable three years to save.

While Ontario remains out of reach for most, it’s a completely different story in the prairies, where homes are extremely affordable. In all prairie cities examined it would take a single year to save up an adequate down payment.

Want to see the full ranking of cities on this list? Check out the infographic below.


Zoocasa is a full-service brokerage that offers advanced online search tools to empower Canadians with the data and expertise they need to make more successful real estate decisions. View real estate listings at zoocasa.com or download our free iOS app.

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