GTA Housing Market Remains One of the Most Expensive in Canada
Finding an affordable home is a challenge for many Ontarians and some find themselves asking if things will get better. A recent report by RBC may show what’s to come in the housing market.
According to the Housing Trends and Affordability Report for June 2019, finding affordable housing in the Greater Toronto Area is still a major challenge.
According to the report, Toronto homebuyers got a very tiny break in affordability this month. Ever since the generational high of 67.1 per cent was reached in late 2016, RBC’s aggregate measure for the area eased by 1.1 per cent to 66.0 per cent negligible.
This means that homeownership is still as challenging as ever.
The Canada-wide measure dipped by 0.3 percentage points to 51.4 per cent in the first quarter of 2019, which is still historically high for this time of year.
The improvement affected most local markets. From the combined price declines in Western and Atlantic Canada, as well as rising household income, the bar to homeownership in most markets was more accessible.
“Much of the improved affordability can be traced to “policy-engineered market downturns” that have helped lower property values in a number of Canadian markets,” said Robert Hogue, the Senior Economist at RBC. “Though neither Toronto or Vancouver is near the levels that ordinary Canadian households can afford, policymakers should be encouraged at the overall progress toward repairing home affordability across the country.”
Despite the slight improvements in the majority of housing markets across the country, Toronto (as well as Vancouver) and surrounding areas remain quite unaffordable.
According to RBC, a household needs to spend 66 per cent of its income to cover housing costs in Toronto.
The situation in Mississauga and other GTA municipalities isn’t much better, with detached houses still hovering around $1 million. The average home price in Mississauga sits at $756,465 (all home types combined). According to a recent Vital Signs report, the median after-tax household income in Mississauga sits at $72,657, demonstrating that wages are not keeping pace with the cost of living in many areas of the country.
Prices in the market are also trending upwards, and RBC claims they’re unlikely to come down in the near term. Data in the report brought evidence, however, that a slow market recovery is now underway.
RBC says this will keep demand and supply in balance, and support further modest price gains.
The RBC Housing Affordability Measures show the proportion of median pre-tax household income that would be required to service the cost of mortgage payments, property taxes, and utilities based on the average market price for single-family detached homes and condo apartments, as well as for an overall aggregate of all housing types in a given market.
Current home prices are sourced from RPS, and established from sales prices from monthly transactions, which are filtered to remove extreme values and other outliers.
What do you think the future of the housing market will look like?
Photo courtesy of RBC Housing Report June 2019