Canadians looking to buy a home in major cities like Toronto and Vancouver will now need to make over $200,000, as rising interest rates and elevated real estate prices take an aggressive bite out of pocketbooks.
According to data collected between March and June 2022 and analyzed by Ratehub.com, a potential homebuyer looking to buy a house in either Toronto or Vancouver will need an annual income of at least $220,000 alongside a 20% down payment. Although the average price of a house in major urban centers has been on the decline from pandemic-highs, the income needed to buy a roof over one’s head in those real estate markets has been steadily climbing.
Compared to March, a household needed to earn an additional $15,750 if they bought a house in Toronto last month, while those interested in Vancouver’s real estate market had to come up with $31,730 more, marking an increase of 7% and 16%, respectively. In fact, in order to buy a house in any Canadian city, one will need to come up with $18,000 more compared to just four months ago.
With inflation persistently sitting at 40-year highs, the Bank of Canada has embarked on an aggressive tightening cycle that just last week delivered a colossal full percentage point increase to its overnight rate. As such, Canadians are now subject to higher stress tests and rapidly rising mortgage rates, making housing affordability even more out of reach for the average household.
Information for this briefing was found via Ratehub.com. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.