New data reveals how much money Toronto residents need to earn to be able to buy a home in the city.
According to new data, released by Ratehub.ca, those looking to buy in Toronto will need to earn more than $220,000 to buy a home in the city with a 20% down payment.
Although Ratehub.ca says the real estate market has started to cool, higher stress test rates caused by rising mortgage rates have significantly increased the annual income needed to buy a home.
“In every city, homebuyers need much more income to buy the median home because of higher stress test rates caused by rising mortgage rates,” said Co-CEO James Laird in a statement.
“This is the case even in cities that saw housing prices fall.”
Ratehub.ca said it used real estate data from March 2022 and June 2022 to make the calculations.
With a median home price of $1,204,900 and a mortgage amount of $963,920 in Toronto, the data showed that anyone looking to buy a home in the city would currently need an income of $226,500.
Stress rates have increased from 5.25% in March to 7.21% in June. The increase comes after a rise in mortgage rates from 3.14% in March to 5.21% in June.
The data found that compared to March, the income that homebuyers need to buy a home in Toronto increased by $15,750 or seven per cent.
Rapidly rising interest rates have pushed down Canadian home prices in recent months, including in Toronto, with the median home price falling 1.9 per cent in June compared to May, according to the Canadian Real Estate Association.
“Home prices will need to fall significantly to offset the effects of higher mortgage rates on the stress test,” Laird said.
“Unless that happens, household affordability will continue to be significantly impacted in the current rising rate environment.”