It’s obvious to anyone who has ever taken the time to crunch the numbers. Real estate in both Toronto and Vancouver is unaffordable for a lot of prospective buyers.
The average detached home in each market has surpassed $1 million. It’s only attached properties like condos, row houses, and townhouses that are responsible for keeping the overall average under $1 million.
The median Ontario and B.C. family makes under $80,000 according to Statistics Canada income information, although those numbers are from 2014. It’s hard to afford property when price-to-income ratios are so out of whack.
The rest of the country is much more affordable. Both Toronto and Vancouver has a price-to-income ratio of more than 10. If we exclude those markets the rest of the country’s ratio is below 5.
Thus, many pundits have long predicted Vancouver and Toronto’s real estate markets will crash.
But the opposite has happened. Sky-high values keep on rising even further, putting real estate further out of reach for many first-time home buyers.
The same rules apply for buying a home in expensive markets versus cheaper ones. Prospective buyers should crunch the numbers and only buy a place they can truly afford. This is much tougher in Toronto or Vancouver versus other markets like Winnipeg or Halifax.
And if someone can’t afford a house comfortably, renting isn’t a bad option either. After all, renting comes with its own set of advantages. And remember, houses don’t always go up in value. A renter would be in a good spot if the much-anticipated crash actually happened.
