This housing data expert has identified the 5 most affordable areas in Toronto for condos and detached homes, and the income needed to attain them.

While Toronto home prices have dropped some 25 per cent since the peak, carrying costs have not fallen by the same amount.

Toronto-area home prices have dropped by almost 25 per cent since the pandemic peak, but experts warn it hasn’t meaningfully improved affordability as interest rates remain high and incomes lag. But there are a handful of Toronto neighbourhoods where your money stretches further.

Major real estate groups and leading economists have touted that home prices are trending in a more affordable direction since the 2021 and 2022 feeding frenzy, but it still takes an income of at least $140,000 to qualify to buy a detached home or at least $77,000 for a condo even in the most affordable neighbourhoods, according to calculations from real estate data expert Christian Mijatovic.

Mijatovic analyzed home prices and interest rates using basic mortgage calculations to compile a list of Toronto neighbourhoods where you need the most versus the least income to buy a detached home or a condo. None of the more affordable neighbourhoods are downtown.

“If you’re not living in a household where it’s a dual-income household, you’re having a very difficult time affording to buy a family home in Toronto,” said Mijatovic, who has been working in real estate for over a decade.

While it’s become more affordable to buy a condo since prices in the segment have fallen substantially from the 2022 peak, buying a family-sized unit is still difficult, he said. Interest rates need to fall further and salaries need to rise higher to make housing more attainable, but that likely won’t happen any time soon.

“Even though borrowing costs have come down from their peak, mortgage rates remain well above the ultralow levels buyers became accustomed to, while incomes haven’t kept pace with the overall cost of home ownership,” he said, adding that when markets become too unaffordable people leave the city for the suburbs or exurbs, hurting the local economy.

Most vs. least affordable pockets

The household income needed to buy a home close to $1 million — roughly the Toronto region’s average home price — is almost $195,000, according to Ratehub.ca in July.

Home prices edged lower in July, improving affordability slightly, said Jamie David, vice-president of mortgages at Ratehub.ca. Prices fell further in August, hitting just under $1 million for the first time since January, according to data from the Toronto Regional Real Estate Board.

“Home price changes were the biggest driver of improved affordability,” said David, speaking on the July figures.

Mijatovic found the income needed to buy a detached home compared to a condo varies drastically by neighbourhood.

For detached homes, the Bridle Path—Sunnybrook—York Mills area had the highest median home price of almost $5 million, with an income of $893,000 needed to purchase.

Mount Dennis (just north of the Junction) had the lowest median home price of $765,000 with an income of $140,000 needed.

For condos, which have dropped in price by 23 per cent in the Toronto area since the peak, the income threshold is much lower.

“It certainly has pushed condos closer into affordability, although condo fees have increasingly gone up year over year,” Mijatovic said.

The Bridle Path—Sunnybrook—York Mills area had the highest condo price of $1.425 million with an income of $267,000 needed to purchase.

Black Creek (just north of Mount Dennis) had the lowest condo price of $355,000 with an income of $77,000 needed.

The most recent available income data from Statistics Canada shows that a one-person Toronto household had a median total income of $45,200 in 2020, while a two-person or more household had a median total income of $107,000.

When analyzing Toronto neighbourhoods, Mijatovic used the median home price from January to July this year, based on TRREB’s data. He factored in the best available five-year fixed rate, which was 4.04 per cent at the time, with a qualifying rate or stress test rate of 6.04 per cent, assuming 20 per cent down and a 25-year amortization.

The calculation also includes property tax, monthly heating cost, applicable condo fees, and factors in the maximum gross-debt service ratio which is 39 per cent.

Carrying costs see little improvement

Home prices are down significantly since the pandemic peak, but monthly carrying costs haven’t significantly improved.

“On the surface, things look like affordability is improving, average prices are down, close to 25 per cent from the peak. But the challenge is when you factor in interest rates, we’re not that much better off,” said John Pasalis, founder and broker of Move Smartly Realty.

“When we think about affordability, it’s not the price. It’s what does it cost the average household to own a home?” He added that monthly mortgage costs are only down by around 10 per cent since the peak.

“We’re not that much more affordable once you take the higher interest rates into account. And we’re significantly above where we were pre-COVID,” he said.

In 2019, the average home price for a single-family home was close to $1 million. With a 20 per cent down payment of around $200,000, and the best available interest rate of less than 2 per cent, the monthly mortgage cost was around $3,700. That jumped to $6,000 a month during the peak of the pandemic, and is now sitting at around $5,500, Pasalis said, according to his rough calculations.

He said it’s highly unlikely interest rates will hover around the 3 per cent mark any time soon — where they were pre-pandemic — with economists forecasting rate hikes next year as the U.S. trade war escalates.

“People are just stretched so thin,” Mijatovic added.

“Everything costs so much more now that being able to even save up a down payment let alone being able to afford the mortgage payment on that house is extremely difficult.”