Will homes ever be affordable in the Greater Toronto Area? This important topic is raised by numerous publications on Toronto real estate that estimate the average cost of a home at approximately $1 million.
Housing specialists told BNNBloomberg.ca that it is improbable because young people would continue to struggle with affordability for years to come, especially those making average or reasonably high salaries. Ene Underwood, CEO of Habitat for Humanity’s Greater Toronto Area office, expressed her concern about the issue.
“I hope so,” I replied. However, I worry a lot about whether it will ever be affordable.
Income vs Price
In order to investigate the problem and suggest remedies, the Ontario government formed a task force on housing affordability. Underwood was a member of this group.
The panel highlighted the discrepancy between Ontario residents’ home prices and salaries in their final report, which was published in 2022. According to the survey, over a ten-year period, home values increased by 180 percent while wages increased by only 38 percent.
It’s unlikely, he said, that costs will drop significantly. One problem is that the frequently suggested remedy of increasing supply to counteract long-term price increases won’t result in a decrease in prices in the near future.
Who can afford?
Some young people are able to enter the property market, but they often need some sort of financial advantage, such as the “bank of mum and dad,” according to Underwood, who added that this assistance from their families.
According to Amborski, anyone might enter the real estate market through unconventional means, such as by purchasing a less expensive property and renting it out. The new tax-free first home savings account is another way for people to save, but Amborski said the $40,000 lifetime cap “won’t get you very far.”
“There are different ways people have been able to manage, some people have, but it’s not so much the norm as it is the exception,” Amborski said.
Another aspect of the situation is Toronto’s high rent prices.
When asked if rent will ever be reasonable for someone on an average income again, Davelle Morrison, broker of Bosley Real Estate Ltd, simply answered “no.”
In a recent interview, Morrison stated, “I don’t think that it will be.” She said that there might be periods of time when rent prices decline, as as in the early stages of the COVID-19 pandemic, but she anticipates that prices would remain high in the absence of significant, concerted attempts to increase the supply of affordable housing.
Another issue that would-be homeowners must deal with is expensive rent, which makes it more difficult to save for a down payment, Amborski added.
Additional Solutions
The solution to Ontario’s housing dilemma has been identified as increasing the supply of dwellings.
To remedy the shortage, the affordability task force suggested that Ontario construct 1.5 million new houses over the course of ten years. However, Underwood cautioned that the ambitious objective will be difficult to achieve and that it is uncertain just how much it will lower prices.
Regarding rentals, Morrison predicted that eventually the government would have to get involved to reduce expenses.
Because they cannot rely on private individuals to solve the affordable housing situation, she said, “the government needs to start building them.”
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