As the real estate market in Ontario continues to adjust following the Bank of Canada's most recent interest rate hike, prospective homebuyers find themselves facing the critical question of what exactly they can afford.
And with housing prices varying significantly across the province and property type, it's essential to understand the financial requirements necessary to purchase a home comfortably.
A recent report by HelloSafe, a leading platform for comparing financial products in Canada, sheds light on the average gross annual income needed to acquire a 1,500 square foot home in Ontario.
The report utilizes up-to-date data and expert analysis to determine the average gross annual income required for prospective buyers to afford a 1,500 square foot property. By examining various cities and towns across the province, the report paints a vivid picture of the income levels necessary to meet the demands of the real estate market.
According to the report's findings as of June 2023, the average gross annual income required to purchase a 1,500 square foot house in Ontario is $175,491. This figure provides prospective buyers with a benchmark for evaluating their financial readiness and planning for homeownership.
Let's delve into the key findings of this insightful report and explore the regional differences that significantly impact homebuyers' budgets.
Unsurprisingly, Toronto stands out as the city where prospective homeowners must earn the highest income to afford a 1,500 square foot house in the province. In this bustling metropolitan area, the report indicates that households can expect to have a gross annual income of $591,828. With its vibrant economy and thriving real estate market, Toronto's housing affordability remains a topic of great significance for aspiring homeowners.
According to the findings, three other cities also require a gross annual salary of over $500,000 for the acquisition of a 1,500 square foot house: Halton Hills, Aurora and Richmond Hill, all in the Greater Toronto Area.
On the other end of the spectrum, the report reveals that Timmins boasts the lowest required gross annual salary among the cities analyzed. For individuals considering purchasing a 1,500 square foot home in this welcoming community, a yearly income of approximately $64,896 is deemed sufficient.
Timmins, with its more affordable real estate options, provides a compelling opportunity for prospective buyers seeking a balance between cost and quality of life. With a gross annual salary of less than $100,000, you can also buy a 1500-square-foot home in Sault Ste Marie ($97,665).
With Toronto representing the upper end of the spectrum and Timmins standing as a more affordable option, prospective homebuyers can use this data to better understand the financial considerations involved in their pursuit of homeownership.
The square foot price data collected is valid for June 2023. Our calculation is based on the assumption of a mortgage loan taken out in Ontario with a personal contribution between 5% and 20%, at a fixed rate for 5 years of 4.89%, over a total period of 25 years, with a debt-to-income ratio of 36% of disposable net income
