Young person looking to move to Toronto? Better line up a professional gig first, or expect to bunk up. Canadian Centre for Policy Alternatives (CCPA) crunched the numbers to find the wage needed to rent in Greater Toronto. Digging into the numbers, we can see how unsustainably high prices have become. The average one-bedroom is unaffordable for over half of the city – even in distant suburbs.
Just because you can make the payments and not go into arrears, does not mean your housing is affordable. The term “affordable” is thrown around a lot, but there’s an actual definition used by the government. For housing to be affordable, shelter expenses need to represent less than 30% of gross (a.k.a. pre-tax) income. Shelter expenses include, but are not limited to, rent, mortgage payments, utilities, taxes. This is the definition used by the CCPA to determine “affordable.”
Living in an unaffordable situation isn’t necessarily defined as poverty either. In Canada, the low-income measure (LIM) is often used to define poverty. LIM considers a household in poverty if their income is below 50% of the median Canadian household income. Even if you spend all of your income on rent, taxes, transport, and not enough food – you’re not in “poverty.” Even by the restrictive measure, over 4.9 million Canadians that fit this definition. That’s about one in seven people. Basically, not being able to put food on the table after expenses is not poverty by many measures.
The Average One-Bedroom Requires An Income of Over $27/HR
The average one-bedroom rental requires quite a bit of cash in Greater Toronto. To afford a one-bedroom rental apartment in the GTA, you would have to earn $27.74/hr, according to the CCPA study. This works out to an income of $57,700 per year – not exactly chump change. Remember, that’s only for a one-bedroom rental, and we’re including far flung suburbs. Don’t even dare think of trying to start a family on that.
Make less than $20 per hour, or $41,600 per year? There’s only four neighborhoods where an average one-bedroom apartment is affordable. Malton has the cheapest one-bedroom average, requiring a wage of $19.11 per hour. Ajax Pickering followed with a required income $19.33 per hour. Rexdale-Kipling comes in fourth, with a required income of $19.47 per hour. Long Branch is the last neighborhood you can squeeze in for under $20, requiring an income of $19.66 per hour. If you’re not from Toronto, only two of those neighbourhoods are actually in the City of Toronto.
Got a little extra cash? The city’s most expensive average one-bedroom prices are all in downtown Toronto. The Bay Street corridor requires a wage of $45.64 per hour for an average rental – the most expensive in the city. Waterfront Communities (including the Island) follow with an average one-bedroom requiring $41.74 per hour in wage. Moore Park is third most expensive – with the average one-bedroom needing $41.08 per hour. Yes, you need an income of at least $85,447 to rent an average one-bedroom these three neighborhoods.
Over Half of Toronto Couldn’t Afford An Average One-Bedroom
More surprising is how few individuals can afford a one-bedroom on their own. The median individual income in Greater Toronto was just $33,600 per year in 2017. Let’s assume generous growth of 5% compounded annually (okay, very generous). The median income would still only be $37,044 per year (~$17.81 per hour). Looping back, that’s not even enough to rent the average one-bedroom in Malton. Half of Greater Toronto cannot afford to rent the average one-bedroom by themselves.
The unsustainable gap between income and rent is going to have consequences. Buyers in the GTA are already delaying their first home buy until their mid-thirties. Further squeezing of wages through rent would mean more pressure on their stability. The further income lost towards shelter has to come from somewhere. The most obvious would be consumption in the local economy, and diversifying investments.
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