Owning a home was once a universal aspiration. Whether the goal was to start a family, achieve independence, or simply secure stable housing, it felt achievable. But for the average Torontonian today, that dream seems increasingly out of reach.
According to the Toronto Regional Real Estate Board, the average home in the Greater Toronto Area (GTA) now costs $1,134,781 as of 2023. This marks a staggering increase over the past three decades, especially when compared to stagnating median incomes in the region. When accounting for inflation, median incomes have barely moved, while home prices have surged past the million-dollar threshold. Even higher earners find themselves priced out of the market.
Stagnant Wages Meet Skyrocketing Home Prices
Despite a slight increase in average incomes in Toronto, median earnings remain unchanged when adjusted for inflation. Census data suggests that while high earners have seen some increase, low earners have seen their income stagnate. Compared to the astronomical rise in home prices, these wage changes seem inconsequential.
In 1990, an individual between the ages of 25 and 54 in Toronto had a median income of $54,310, adjusted for 2023 inflation. That number has barely budged, standing at $54,643 today. Meanwhile, home prices have soared to new heights, making ownership an unattainable dream for many.
The Real Estate Market Then and Now
Real estate prices have undergone a jaw-dropping evolution since 1990. Back then, you could buy an average GTA home for the equivalent of $514,911 today. Prices dipped until 2000 but picked up again by 2010, reaching $586,473 when adjusted for today’s inflation. Now, the average home price is nearly double that of 13 years ago at $1,134,781.
The Rental Market Offers No Respite
For those considering the rental market as an alternative, the picture is equally bleak. Adjusted for inflation, the average rent in Toronto has increased by about 35% since 1990. The most recent data shows that even a one-bedroom unit now costs renters over $2,600 a month. Tenant advocates argue that loopholes in rent control and the shortage of social housing are exacerbating the issue.
Rising Interest Rates and Global Concerns
Adding salt to the wound, the Bank of Canada has implemented rising interest rates in an attempt to control inflation. This has extended amortization periods for homeowners, further complicating the landscape. On an international scale, Canada’s housing bubble is a major point of concern, even more so than in other parts of the world.
Will a Recession Help?
Interestingly, even a recession won’t necessarily bring affordability. A report by Desjardins economists suggests that a severe downturn would only take us back to 2015 price levels—when homes were already expensive, averaging around $770,000.
FAQs
Q: How much has the average home price in Toronto increased since 1990? A: Adjusted for inflation, the average home price has more than doubled since 1990, from $514,911 to $1,134,781 in 2023.
Q: Are median wages keeping pace with home price increases? A: No, median wages have remained stagnant when adjusted for inflation, making home ownership increasingly unattainable for the average person.
Q: What is the current average rent in Toronto? A: As of 2023, the average rent stands at approximately $1,732 per month, a 35% increase from 1990 when adjusted for inflation.
Q: Would a recession bring down housing prices to affordable levels? A: According to a report by Desjardins economists, a severe recession would only bring prices down to 2015 levels, which were already considered “stretched.”
Q: Are interest rates affecting home ownership? A: Yes, rising interest rates implemented by the Bank of Canada have made mortgages more expensive, further reducing affordability.
