If you want to get into the real estate market in Toronto, you’ll need a pretty healthy salary to do so.
Strata.ca realtor Larry Medina crunched the numbers for Curiocity and found that the average salary you need in order to afford a one-bedroom condo in downtown Toronto has gone up significantly since last year.
Last year, the median household income to afford a one-bedroom condo downtown was $130,000, Medina told Curiocity.
However, with new interest rate hikes, you now need a median household income of $160,000 to afford the same property, which is up $30,000 from last year.
“I’d say you need to be making 6 figures for at least a couple of years to seriously consider buying a property,” said Strata realtor Osman Omaid to Curiocity.
“The rule of [five times] your salary is kind of out of the window with today’s interest rates. So it really depends on how much you have saved up, and how many additional expenses you have.”
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What has changed?
The condo market itself hasn’t changed much since last year — the inventory is relatively the same and the average price is $635,000 this year, compared to $615,000 last year.
“The biggest difference is the interest rates and affordability,” said Medina.
“If you don’t need to borrow money from the bank, then you’re in a very favourable market,” said Omaid. “You’re not competing against a lot of demand, and some sellers are very motivated given the market conditions.”
“However if you’re purchasing with a mortgage, then the market is tough.”
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How can buyers save money in today’s market?
According to Omaid, buyers looking to save money should look at the price of the home that the current owners purchased it for.
“If the property was purchased 8 years ago and more than doubled in value, they may be willing to come down a little under market value,” said Omaid.
“If the property was bought a couple of years ago at about $50k less than what it’s listed for, the sellers likely can’t go lower in price even if they wanted to.”
“Look for opportunities,” said Medina. “There are lots of motivated sellers right now that are willing to let go of their properties at a ‘discounted’ price.”
“But make sure the layout of the unit is what you’re looking for and that the maintenance fees are low with a healthy reserve fund.”
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