Buying A Typical Home In Canada? Cities Now Require Incomes Of Up To $230,000

Mortgage rates might be low, but nosebleed home prices still make payments difficult. National Bank of Canada (NBC) data shows the household income required to carry a mortgage on a typical home in Q4 2020. The numbers in some regions are staggering, before even considering downpayments. In Toronto or Vancouver, the middle class can no longer pay for a non-condo home.

About Today’s Data

Today we’re looking at the annual household income needed to afford a typical home. It uses NBC’s benchmark price, and the income required to carry a mortgage. We’re also using the government’s latest median household income for context. The last point is just to illustrate how far (or close) the numbers are. It doesn’t include other hurdles to clear for ownership, like downpayments. This is just how much a household needs to not be in poverty when paying their mortgage.

Toronto Households Need To Make Up To $178k/Year To Buy A Non-Condo

Only the top 20% of Canadian households can buy a home in Toronto – unless it’s a condo apartment. The required household income to carry a mortgage on a non-condo reached $178,499 per year. That’s about 132.7% of the median household income. For a typical condo, they estimate an income of $124,335 is needed per year. It works out to 62% more than a median household currently makes. In other words, much of Canada’s middle class can’t afford to buy in Toronto.

Canadian Household Income Required For A Typical Home

The minimum income required to buy a typical home in Canada’s major cities in Q4 2020.
Source: NBC, Better Dwelling.

Only Canada’s Top Earners Can Afford Vancouver

Not even the top 20% of Canadian can buy a non-condo in Vancouver these days. NBC economists estimate a household needs to earn $230,488 to carry the mortgage in Q4. This is 222.8% higher than the median household income. Condo apartments require a slightly more modest $127,633 in income per year. This is about 78% higher than the median income. I guess we’ll soon find out if a city can exclusively be populated by wealthy households.

Montreal Is One of Canada’s Last Affordable Large Cities… Kind of

Montreal is one of Canada’s last affordable large cities. A non-condo home now requires $91,083 in household income to carry a mortgage. This is about 46% higher than the incomes last reported. For a condo apartment, they estimate households need an income of $67,750 per year. That’s about 8.7% higher than median incomes. Incomes are still out of line, just not nearly as much as they are in Toronto or Vancouver.

Remember, this is just the affordability of carrying the home – there’s a few other barriers. NBC also highlighted how long it would take to save for a downpayment. At the median income, it can take decades in Toronto or Vancouver. It’s also a bit of a moot point though, because at the median income, you still couldn’t pay the mortgage at these prices. These are now markets exclusive to households with both intergenerational wealth, and high paying jobs.

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  • JASON M AZEVEDO 3 years ago

    Your starting to get close to revealing the full scope of how big and bad this bubble really is.

  • Tom Wolfe 3 years ago

    This post proves the false economy that is Canadian real estate. I thinks its amazing *no one* has commented. Silence speaks louder than words?

    • SH 3 years ago

      What is there really to say at this point?

      The Liberal government has tossed aside young Canadians to protect foreign money launderers.

      Unless you are born to billionaires, emigration is the only option.

  • Tom 3 years ago

    These are now markets exclusive to households with both intergenerational wealth, and high paying jobs.

    – no surprise there. There’s not enough supply for the free market to keep these at a price low enough for an average income earner. Basic microeconomics. Sad, perhaps, but not surprising.

    • YOLO 3 years ago

      That would make sense, if there wasn’t literally towers of purpose built rental buildings kept empty because the value of the land appreciates faster than the value of the rental income they can receive.

    • SH 3 years ago

      Prices are where they are precisely because we do NOT have a free market. What do you think would have happened if the government hadn’t forced the banks to give every deadbeat homeowner and landlord a 6-month mortgage deferral and the Bank of Canada weren’t suppressing rates through bond purchases? The housing market is centrally planned.

      Additionally, letting foreigners swamp the market and force Canadians out of their own cities is not a free market mechanism unless Canadians get to do the same in the foreigners’ countries of origin and under similar rules and laws.

      • Erik 3 years ago

        Well said… Spot on.

      • Enough 3 years ago

        Agree with you completely.

        I wish our government would actually put Canadian’s interests first and stop allowing foreign ownership until some of this mess gets resolved.

    • Bob Walter 3 years ago

      It’s not so much a matter of housing supply.
      That is a story mostly purposted by banks. The banks wouldnt mention the other part of the coin that they are responsible for; liquidity supply.

      Housing supply can’t be the heart of the issue, the number of house completions apparently is exceeding record highs. So there must be other things in play. What is going on is a liquidity oversupply. The bank of Canada buying mortgage bonds, the reserves of banks being lowered. All spillgates are open to increase the money supply.

      This created money is streaming into real estate. Canada is choosing inflating of the housing market as means to save the economy. However this is most likely to result in larger problems down the line And maybe sooner than people expect.

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