|Toronto housing market becoming unaffordable||| Print ||
|Monday, 22 March 2010 15:02|
Try as bidding wars might, buyer demand in Toronto’s housing market will not be shaken by the city’s skyrocketing prices.
Confidence in Canada’s much-touted stable financial system, combined with attempts to capitalize on low interest rates before their likely mid-year hike, has lulled prospective owners into a false sense of security.
A Toronto Real Estate Board report outlines a 20 per cent jump in mid-March transactions from this time last year, along with a new average high of $491,680 to live in Toronto proper.
“Very strong demand continues to dominate, lifting sales of existing homes to all-time highs in recent months, yet keen buyer interest has largely failed to attract more sellers, resulting in a dearth of homes available for sale,” an RBC affordability report said.
With average prices second only to those in Vancouver, the surge of prospective homeowners continues despite the high cost of living in Ontario’s capital, which might also be explained by the looming introduction of the Harmonized Sales Tax.
“In Ontario and British Columbia, demand for housing should also receive a further boost this spring from buyers rushing in ‘to beat’ the implementation of the HST on July 1, 2010 – which will increase the transaction costs associated with a home purchase,” the RBC report said.
Earlier this month, another RBC survey reported 15 per cent of Canadians aged 18 to 24 said they will purchase houses in the next two years, up from eight per cent the year before.
However, Stats Can reported in 2007 that young adults (aged 18 to 24) lived on low incomes for at least one year 30 per cent more often than other age groups.
With the average GTA price of a detached bungalow coming in at $452,800, even low interest rates cannot make up for the necessary qualifying income offered by the RBC of $98,500 annually.
The RBC report confirms that affordability levels have moved above long-term averages, saying “stress is starting to build in the Toronto market.”
Buyers need to rein in their expectations – before they bid themselves beyond their means.
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