Unless you are insanely wealthy or have somehow managed to avoid all local news content over the last decade, I do not need to tell you that it is becoming increasingly expensive to live in Toronto.
It is well established that home ownership is clearly out of reach for most people under the age of 40 who were too young to enter the market before buyers needed a household income of nearly $ 200,000 just to qualify for a average mortgage and that homelessness is rising.
Young people are leaving the city in droves to buy houses and start families in smaller towns (that or quit renting forever), and people who can not afford to pay rent at all are becoming increasingly vulnerable as the pandemic subsides.
Analysts have largely blamed a terrible shortage of housing supply for both of these problems and for the meteoric rise in house prices across Canada in general.
Although this speed situation was accelerated by the pandemic, it did not manifest itself overnight. However, it gradually got worse last quarter than anything recorded since the 1980s, and that’s a pretty big thing.
A new report on housing trends and affordability from RBC Economics warns that price reduction is “on a sharp decline” in the Toronto area (as if it had not already been shredded into small pieces.)
As of Q2 2021, the bank reports that it is now taking 59.1 percent of an average household’s total income just to cover the cost of ownership in Toronto. Make it home to a detached house and the number shoots up to 71.6.
That’s more than double what Canada Mortgage Housing Corporation classifies as “affordable” (less than 30 percent of a household’s pre-tax income) in Canada.
“RBC’s overall action jumped by an astonishing 4.1 percentage points to 59.1% in the second quarter — the largest increase in nearly three decades,” reads the report, which was released Thursday.
“With extremely tight demand and supply conditions that continue to ignite a fire below property values, the measure is poised to rise further to levels not seen since the late 1980s. The situation is most strained for single-family homes, where it hot heat demand continues intense upward pressure on prices. “
Economists at RBC expect buyers in the Toronto area to show increasing interest in the apartment category, which is still relatively (but not technically) affordable with a total price of 34.7.
And it’s not just Toronto that is experiencing this wild ride, or even just Toronto and Vancouver.
While Canada’s two lighthouses with affordability recorded the largest rates of deterioration in the second quarter of 2021, RBC says all major markets and housing categories across Canada became less affordable.
“Overall, prices are most burdensome in Vancouver (ownership costs represent 63.5% of household income), Toronto (59.1%) and Victoria (48.0%),” the report notes, noting that Ottawa and Montreal are also so historic high out with measurements of 38.5 and 38.4, respectively.
But that’s not all bad news: affordable prices may have eroded in all major markets (again with most for more than 30 years), but RBC says there are still parts of Prairies and Atlantic Canada where house prices are historically low.
“Despite recent increases, RBC’s measures are still below their long-term averages in Calgary, Edmonton, Regina, Saskatoon, Winnipeg, Saint John, Halifax and St. John’s,” said RBC Senior Economist Robert Hogue, who also suggests house prices did not win. keep shooting in the air like this forever.
“We expect house prices to continue to rise in the short term as the conditions of demand and supply generally remain unusually tight. This will further increase cost of ownership across a wide range of markets and housing categories,” Hogue said.
“That said, the decline in affordable prices is poised to become moderate. Rising prices are now falling in many places, and we expect prices to flatten in 2022.”