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 HomeThe 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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