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Can you Afford a Home in Today’s Market?

by admin on March 30, 2015

With increasing housing prices in Ontario, housing affordability in Canada is currently deteriorating. Buying a home in Toronto, or in West Vancouver (Canada’s least affordable market), would now require a much larger salary than it did 30 years ago. The approximate salaries of $126,530 and $320,932 would be needed to afford an average home price of $630,858 in Toronto and $1,757,700 in West Vancouver, respectively. In 1985, the average house price in Toronto was $109,094; indicating that there has been a dramatic increase in pricing. Evidently, it is now a more difficult stretch for homeowners to purchase a home in these markets.

Luckily, the current low interest rates are helping to steady housing affordability, specifically the overnight rate cut to 0.75% by the Bank of Canada. As a result, the monthly mortgage payments in relation to income have only slightly increased between 1985 and 2015. However, when the rates start to rise, as it is predicted to do so in 2016, affordability will once again become a cause for concern to many Canadians.

Nevertheless if you’re still planning on investing in real estate, there are plenty of neighbourhoods in the Greater Toronto Area that can be worthwhile. For example, Pleasant View in North York, East-End Danforth in Toronto, Cornell in Markham, Central in Oshawa, Bayview Wellington in Aurora, etc. According to MoneySense Magazine, these neighbourhoods, among a few others, show good potential to appreciate, and have great home values and momentum.

Written by Christy Lee

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