It takes a six-figure income to afford virtually any home in the Greater Toronto Area, and this expense is posing a serious financial challenge to peak millennials (i.e. those aged 25 to 30) who aspire to buy homes and raise families.

A household income of more than $200,000 a year is needed to afford the $1.15m price tag of the average detached house in the Toronto region, according to a report from TheRedPin, a Vancouver-based brokerage.

Even the average condo apartment, which costs around $511,000, requires an annual income of $92,925 to afford the $1,933 monthly mortgage, in addition to the taxes, utilities, and condo dues associated with the purchase, according to TheRedPin.

While more than half (59%) of peak millennials in Ontario would like to own a detached house in the next five years, only 30% think they will be able to afford one, according to a new report by Royal LePage based on findings by Léger.

According to TheRedPin, buyers would need more than $150,000 a year to cover the cost of a home in half of the 22 Toronto area municipalities.

Toronto’s average home price of $864,228 is affordable to buyers with an annual income of $147,750, though that average may be skewed lower by the considerable number of condos entering the market.

The most expensive real estate market in the GTA is in King Township. Buyers there would need $264,000 a year to afford the monthly mortgage of $5,883 and other expenses for an average home priced at $1.6m.

TheRedPin study averaged home prices over the first seven months of the year, and assumed that buyers had a 20% down payment and a 2.99% mortgage, amortized over 25 years. The income requirements took into account the areas’ average utility costs and property taxes.

Estimated condo fees were based on a 900-square-foot condo townhouse and a 750-square-foot apartment.
 

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