It’s interesting to note that Canadians will take approximately 13 years to save up for 20% of the down payment for a home. In 1976, it only took about five years.
Home and condo prices in Toronto have been inflated now for more than 10 years and this has influenced the purchasing decisions of potential buyers across the city. Many of these potential buyers have had to give up on their dreams of becoming homeowners and this is especially true in regards to millennials.
Experts are now expecting to see the real estate bubble in Toronto burst in 2020. A real estate housing bubble is always a temporary event, but it can seem permanent since it can last for a number of years. Usually, this bubble is driven by an unexpected outside force such as speculation, demand, too much liquidity or high investment levels, which ends up causing unsustainable home prices.
In Toronto, the average price of a home sits at approximately $873,000. This means that the buyer of a home would have to earn a very high income within the top 10% in the local area. In other words, a person would need to be making at least $125,000 per year to afford an average-priced home in Toronto.
Bloomberg has released the data that Toronto home prices will drop along with prices in New Zealand and Canada. As well, Senior Economist for RBC, Robert Hogue, has stated that the GTA and the Vancouver real estate markets have been cooling off recently and that a gradual shift in price is much better than a faster more dramatic drop.
It’s expected that the prices of homes in Toronto will remain quite elevated but the central bank rate cuts could lead to more chances of a drop in pricing. If this occurs and the housing prices drop, millennials will have more of a chance of entering the real estate market in the GTA and in other major cities across Canada.
Lower Mortgage Rates
Although millennial’s have been struggling and having a hard time passing the stress test during the last decade, it has just become a little easier for them to pass the test now due to falling interest rates. The Bank of Canada has lowered mortgage rates from 5.34% to 5.19%, which signifies the first rate drop to be seen in the last 3 years. In September 2016, we saw the Canadian mortgage rates decrease by .10% with the rate falling to 4.64%.
In 2019, people who are applying for a mortgage are tested against their qualifying rates along with an extra 2% or against the five-year benchmark rate. This means that some of the applicants, including millennials, will find it easier to secure a home loan this year and may themselves qualify whereas they wouldn’t have qualified in the past.
Toronto is the Most Popular Place for Real Estate in Canada
Even though the price of living in Toronto and purchasing a new condo or home is quite high compared to many other places across the country, it has become the most desirable city for real estate. According to a recent survey, 54% of Canadian adults would be willing to make the move to a different city in order to see their dreams come true by owning their own home. This shows that the dream of owning property is still alive and well in the hearts of Canadians.
When asked on the survey what would be the number one choice of city for relocation, Toronto took the number one spot. Even with the relatively high-priced real estate market, people are willing to move to the GTA. The results of the survey also showed that 70% of millennials and 85% of adults from Gen Z are open to make a move. That is quite a large number especially when you consider that only 26% of the seniors polled over the age of 65 said that they would be willing to make a move.
Over the years, Toronto has become a magnet for active, young people and even more specifically, millennials. While Toronto was at the top of the list, St. Catherines and Halifax were also in the top three of the list of the most desirable cities to which to move. Regina, Saskatchewan was at the bottom of the list.
It’s interesting to note that Canadians will take approximately 13 years to save up for 20% of the down payment for a home. In 1976, it only took about five years to save up enough for a down payment. Even though it can take years to break into the real estate market, it’s nice to see that many young Canadians are still working hard to make owning a home a reality.
If you’re looking for real estate in the form of a new condominium development in Toronto, the GTA or the surrounding area, you can visit condoroyalty.com to see the new condominium buildings that are changing the cityscape both now and in the near future.