Toronto real estate prices have been on a steep and steady incline in recent years, so it’s little surprise that the city’s housing market ranked #15 of 16 Canadian cities when it comes to housing affordability, according to the 2020 RE/MAX Housing Affordability Report. However, cost-conscious home hunters in search of a good deal can still find one in the communities of North Etobicoke, North-West Scarborough and Scarborough West, which have been named the most affordable neighbourhoods to buy a home in Toronto.
Factors contributing to Toronto real estate prices
Toronto real estate saw a 5.4-per-cent price increase from 2018 to 2019, with another six-per-cent boost expected this year (source: 2020 Housing Market Outlook Report). This has been a contributing factor in Toronto being named one of Canada’s least-affordable housing markets.
In its inaugural Housing Affordability Report, RE/MAX examined 16 of Canada’s most-populous regions and ranked them on an affordability scale, with #1 being the most affordable and #16 being the least affordable. RE/MAX brokers were surveyed about average home sale prices and whether they believe real estate in their region is overvalued, undervalued, or right on the money. Toronto real estate came in at #15 of 16 cities. Canada’s most affordable city to buy a home is Regina (#1) and the least affordable place to buy a home is Vancouver (#16).
RE/MAX’s affordability ranking was determined by assessing the percentage of a buyer’s monthly income needed to carry a mortgage, assuming a down payment of 25 per cent, and based on the forecasted 2020 average sale price per region and the forecasted 2019 average household income.
Real estate in Toronto (which includes Toronto proper, Scarborough, Etobicoke, York, East York and North York) is considered to be fairly valued, but affordability in the city remains a challenge for many. The average 2019 price of residential Toronto real estate was $883,520.
Toronto homebuyers reported being priced out of the market, and first-time homebuyers are also facing added pressures including the mortgage stress test, saving enough for a down payment, a shortage of listings and rising condo prices.
For first-time homebuyers in Toronto – the buyer segment that is typically the most-challenged by high home prices – condominiums are the property type of choice, ranging in average price from approximately $450,000 to $550,000. To help overcome the affordability obstacle, first-time homebuyers are also increasingly embracing co-ownership to help them enter the market, sometimes dividing the home by floors/levels, to accommodate a multi-family living situation in a single-family house.
Despite the commonly held notion that housing in Canada is unaffordable, the report finds that the vast majority of Canada’s largest urban centres (75 per cent) are currently undervalued, according to a survey of RE/MAX brokers in 16 of Canada’s most-populous cities.
In its report, RE/MAX explored the most popular property types sought by first-time homebuyers, the least and most affordable neighbourhoods in each of the 16 housing markets, factors preventing buyers from entering the market, and methods homebuyers are using to enhance the affordability of homes. Current and prospective Canadian homeowners were also surveyed about their sentiments around home ownership, barriers to owning a home, financial factors impacting home ownership, and what could potentially improve housing affordability.
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