23 May 2011
In Toronto housing affordability rose by 0.8% for a 1,200 square foot bungalow in the first quarter. It means today 47.5% of household income goes to mortgage payments, property taxes and utilities. (It should be noted that the higher the index is the less affordable is the property).
Generally, the average price of a bungalow in Toronto was $486,900. So the qualifying income necessary for buying it was $103,000 (in case of 30 years amortization, 5% down payment and RBC’s Special 5yrs. fixed rate at 4.44%). Of course, today there are many other lenders with better rates and more flexible qualification rules. Moreover, a borrower with excellent credit history can qualify for a larger house.
Nevertheless, markets tend to differ one from another. For example, in Vancouver an average price of 1,200 square foot bungalow is $736,000, so the qualifying income is $136,900.
But still RBC expects the housing demand to stay more or less unchanged in the next two years.
According to RBC, Ontario market is quite stable, though there may be some changes later caused by interest rate increases and the consequences of new mortgage regulations, implemented earlier this year.