Toronto’s real estate market has recently eclipsed even Miami and New York City in terms of affordability — or lack thereof.
In a surprising turn of events, Toronto has been marked as less affordable than historically high-cost cities like New York City and Miami. This revelation comes from a study that uses U.S. dollars uniformly across the board to ensure a fair comparison, highlighting a unique approach not often seen in standard reports, which tend to omit currency contexts.
The Data Behind the Numbers
The basis of this comparison is a recent study by Zoocasa, which factors in the median incomes and average home prices across different cities. According to their findings, the average home price in Canada was reported at about USD 575,000, which starkly contrasts with the U.S. average of USD 540,000. This is particularly noteworthy considering that the median household income in Canada trails that of the U.S. by approximately USD 20,000.
The Impact of Interest Rates and Currency Exchange
Interest rates and currency values play a crucial role in the affordability of housing. The study assumes a 20% down payment with mortgages stretched over 30 years. In this scenario, U.S. affordability was gauged at an average mortgage rate of 6.79% as of late March 2024, whereas Canadian borrowers faced a lower rate of 4.79%. These figures do not take into account additional costs like taxes, insurance, and heating, which can significantly affect the overall affordability.
A Closer Look at Affordability in North America
The study uses a color-coded system to depict the differences in housing affordability across North America, with darker shades indicating higher disparities. Toronto, alongside New York City and Miami, appears in darker hues, signaling its high-cost status compared to other major cities like Saskatoon and St. John, which are marked as the most affordable.
What Does This Mean for Homebuyers?
The rising unaffordability discussion of Toronto’s housing market is a complex issue influenced by various economic factors, including interest rates, median incomes, and international currency values. The challenge is that if interest rates do come down, that may push pricing even further, which will keep affordability at the current levels. In order for affordability to fully return, prices would need to stay the same as rates drop, which might not be likely. It’s also important to note the differences in property types across Toronto and the condo market has been slower than the freehold market as a whole. Putting more pressure on prices for detached, semi detached and townhouses. Let’s see how the spring market of 2024 plays out while we await the April numbers in the coming weeks.
In a surprising turn of events, Toronto has been marked as less affordable than historically high-cost cities like New York City and Miami. This revelation comes from a study that uses U.S. dollars uniformly across the board to ensure a fair comparison, highlighting a unique approach not often seen in standard reports, which tend to omit currency contexts.
The Data Behind the Numbers
The basis of this comparison is a recent study by Zoocasa, which factors in the median incomes and average home prices across different cities. According to their findings, the average home price in Canada was reported at about USD 575,000, which starkly contrasts with the U.S. average of USD 540,000. This is particularly noteworthy considering that the median household income in Canada trails that of the U.S. by approximately USD 20,000.
The Impact of Interest Rates and Currency Exchange
Interest rates and currency values play a crucial role in the affordability of housing. The study assumes a 20% down payment with mortgages stretched over 30 years. In this scenario, U.S. affordability was gauged at an average mortgage rate of 6.79% as of late March 2024, whereas Canadian borrowers faced a lower rate of 4.79%. These figures do not take into account additional costs like taxes, insurance, and heating, which can significantly affect the overall affordability.
A Closer Look at Affordability in North America
The study uses a color-coded system to depict the differences in housing affordability across North America, with darker shades indicating higher disparities. Toronto, alongside New York City and Miami, appears in darker hues, signaling its high-cost status compared to other major cities like Saskatoon and St. John, which are marked as the most affordable.
What Does This Mean for Homebuyers?
The rising unaffordability discussion of Toronto’s housing market is a complex issue influenced by various economic factors, including interest rates, median incomes, and international currency values. The challenge is that if interest rates do come down, that may push pricing even further, which will keep affordability at the current levels. In order for affordability to fully return, prices would need to stay the same as rates drop, which might not be likely. It’s also important to note the differences in property types across Toronto and the condo market has been slower than the freehold market as a whole. Putting more pressure on prices for detached, semi detached and townhouses. Let’s see how the spring market of 2024 plays out while we await the April numbers in the coming weeks.
