Salary Needed For Home Buying in Toronto: Helpful Advice

When trying to determine the salary needed for home buying in Toronto, it’s a great question to ask in this seemingly bearish real estate market climate right now. If you’re a first-time homebuyer and looking to buy a home in one of Toronto’s amazing neighbourhoods, and are wondering how much you need to make, you might want to start saving up. According to a new report from RBC Economics, home ownership costs in the city have skyrocketed, driven by soaring interest rates. The bank’s aggregate affordability measure is now at its lowest point in history, at 62.7 percent.

Affordability Still An Issue For Most Home Buying

This means that even though home prices may have fallen a bit since the Bank of Canada started raising interest rates in March, purchasing property is no more affordable than it was last year. And with six consecutive rate hikes in just nine months, many buyers are finding it difficult, if not impossible, to secure the funds to buy a home.

You Need A Household Income of $240,000 Per Year To Buy A Home

To qualify for a mortgage on the purchase of a typical Toronto home at the benchmark price (about $1,074,300 across all property types), you’ll now need to make a household income of at least $240,000 per year. That’s a 29 percent increase over the previous year, and it’s one of the reasons why home sales have dropped so drastically in Ontario (sales are down by 41 percent year over year). The number of first-time homebuyers entering the Toronto real estate market continues to shrink as they literally get priced out of the market.

And it’s not just Toronto that’s experiencing this problem. According to the report, it’s never been so unaffordable to buy a home in this country. The report also states that skyrocketing home prices earlier in the pandemic raised the bar by several notches for Canadian buyers. But the spike in interest rates since March, 2022 served a crushing blow in parts of the country meaning the salary needed for home buying in Toronto is increasing even higher.

Home Buying Prices Are Falling

When it comes to the salary needed for home buying in Toronto, The good news is that RBC economist Robert Hogue predicts that the market will eventually absorb the rise in mortgage rates. He predicts that “the market correction’s silver lining is it’s setting the stage for some affordability improvement in the year ahead. We expect the national benchmark price to fall 14 percent from its early 2022 peak, providing significant scope to lower ownership costs once interest rates stabilize.” Hogue predicts that this could start in the early part of 2023, though he notes that the timing is likely to vary by market.

Salary Needed For Home Buying in Toronto

Buying a home in Toronto, and other parts of Canada, is becoming increasingly unaffordable for many prospective first-time homebuyers and investors alike. The salary needed for home buying in Toronto faces challenges with interest rates on the rise, so many first-time homebuyers are finding it difficult, if not impossible, to secure the funds from a bank or mortgage lender to purchase their first home or condo. However, there is some hope on the horizon, as RBC economist Robert Hogue predicts that the market will eventually absorb the rise in mortgage rates and that affordability will improve in the year ahead. Consult with your local mortgage broker, bank or trusted Toronto real estate agent and get the information you need to save for your future home.