There’s no doubt about it — Ontario is an expensive place to buy real estate. The province has a robust and diverse economic landscape, its southern portions have relatively mild weather and it’s extremely multicultural, which attracts immigrants. All these factors combined means there is high demand for Ontario real estate, especially in the major cities.
In fact, about 39 per cent of the entire Canadian population lives in this province, but they’re not spread out evenly over its 1.076 million kilometres. Instead, the population of 13.6 million squeezes itself into several major cities, with almost 5.5 million people crammed into the Greater Toronto Area alone and a large chunk of the rest scattered in smaller cities near the United States border, plus Ottawa.
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These population clusters have an enormous impact on the province’s housing prices, with many of the most popular cities being technically unaffordable for most residents.
A region’s home affordability is dependent on the relationship between how much residents earn and the average home price. These two factors must be aligned in order for residents to afford to purchase and carry local properties.
To determine which markets match up with incomes, Zoocasa calculated the required income to purchase the average home in 28 major markets across the province, assuming a 20 per cent down payment is made at a mortgage rate of 3.14 per cent and a 30-year amortization. This amount was then compared to the actual median household income in each region, to determine whether local home buyers face an income gap or surplus when attempting to enter the market.
Zoocasa’s findings were surprising.
Firstly, Toronto, contrary to popular belief, is not the most unaffordable place to buy. Rather, that award goes to Richmond Hill, the city located just north of Toronto.
Richmond Hill locals must earn $136,315 to properly afford the average property price of $999,311. But the median income is just $88,535, leaving them an income gap of $47,962.
In comparison, a Torontonian earns slightly less at $65,829, but the average property price is also lower, at $785,223, thanks to the proliferation of less expensive market segments like condos. Still, a household would need to earn $107,111 in order to afford a house, leaving them a slightly lower income gap of $41,282.
Once you exit the cities just North and West of Toronto, along Lake Ontario property becomes much more affordable.
Check out the infographic below to see the exact income gap for these cities (and more):
Zoocasa is a real estate company that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier and more successfully. Home buyers can browse homes across Canada on the website or the free iOS app.