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Starter Homes in Toronto

This two-bedroom, two-bathroom starter home in the Rogers and Dufferin area of Toronto features new laminate flooring, newer windows, and a legal front pad parking spot.

So far, our starter home blog post series has taken us from British Columbia, through the prairies, and all over Ontario. After looking at cities in both Northern and Southern Ontario, our last stop in the province is also the largest city in Canada: Toronto. And it should come as no surprise to read that starter homes (and their listing prices) range greatly, depending on where and what first-time buyers are looking for.

After interviewing a couple of realtors in the city, it became blatantly obvious that there are two different types of starter homes in Toronto: the downtown condo and the small home in or around the city.

“Despite what the media says, the downtown condo market is still extremely active, and good spaces sell quickly (in less than 2 weeks), so there isn’t much time to make decisions,” explained Toronto realtor Melanie Piche.

According to Piche, first-time buyers can get into a one-bedroom condo downtown, typically with less than 700 square feet, for $350,000 to $400,000. If you don’t need that much space, a 500 square foot junior one-bedroom (where the bedroom doesn’t have a door) condo can be found for closer to $300,000.

“For these prices, buyers can get into a newer building with upgraded finishes, like stainless steel appliances and engineered hardwood floors,” said Piche.

What you won’t often get for those prices is a parking spot, which Piche points out is an add-on that comes at a premium. And the same can often be said for small starter homes in and around the city.

While some semi-detached homes come with attached garages, laneway parking is an option seen more often than not in Toronto.

“I primarily work in Central Toronto, where many bungalows, semi-detached homes, and even a few detached homes come with three bedrooms, two bathrooms and a small garage or laneway parking,” explained Toronto realtor Mark Savel.

According to Savel, the price of a starter home with those features in Toronto often depends on how much work the buyer is willing to put into it.

“For people willing to get their hands a little dirty, homes can start around the low $400,000’s. If you’d prefer something that doesn’t need much work, you’ll be looking at the low $500,000’s.”

Based on what both realtors said, we pieced together this chart using real homes listed on MLS.

Toronto Starter Home Chart

Using these two examples, it’s easy to come to the conclusion that, while the asking price may be lower, buyers pay a premium (via cost per square footage) to live downtown. But any condo owner can tell you they pay yet another premium, in the form of monthly condo fees.

Running these two examples through a mortgage calculator, and assuming both buyers made a 10 per cent down payment and took on one of Toronto’s lowest mortgage rates (a 5-year fixed rate of 2.74 per cent), the monthly mortgage payment on the condo would be $1,558 versus $1,900 for the starter house.

However, this particular condo’s monthly fees are just over $350, bringing the monthly payment up to more than $1,908. With a total payment of that size, it’s not surprising that most buyers purchase their first property with a partner.

“It usually takes two incomes to afford a home in Toronto,” added Savel. “I generally work with clients in their late 20s to mid-30s.”

No matter what a buyer is looking for, or where, both Piche and Savel agree on one thing: potential homebuyers should get pre-approved for a mortgage, before they start their house hunt.

“I advise my clients to get pre-approved because, when the right property comes up, it often sells very fast,” said Savel.

Piche adds, “We haven’t seen many bidding wars for condos this spring, but unique lofts can still attract multiple offers.”

If you’re thinking of getting into the market soon, talk to a Toronto mortgage broker today. And if you’re already close to purchasing a home you should begin looking for a Toronto home inspector and a Toronto real estate lawyer.