How Much Will It Cost to Buy a House in Toronto?

If you plan to buy a house, you may have heard some people say it is best to let the market cool down. It is the same advice repeated yearly in the last few years. However, the average cost of houses in the Greater Toronto Area continued increasing, and much more so during the pandemic. Is buying a home today better than waiting for the housing market to slow down? The trend indicates you should before it becomes much more expensive in the foreseeable future.

The Cost of Buying a House in Toronto

The first thing that comes to mind when thinking about buying a house is how much it costs. You may have a preferred price range, but is it genuinely affordable?

Toronto Housing Affordability

According to the National Bank of Canada, the average cost of non-condo houses in Toronto is $1,039,438. Your annual household income to afford this price level should be at least $178,499 (Housing Affordability Monitor).

Although mortgage qualifying rates have not changed substantially, the mortgage rates are historically low (McClelland). On this basis alone, you could say that it helped in housing affordability. However, the reality is that both unemployment and savings rates also increased, which negate the benefits of low mortgage rates. At any rate, the average selling price of residential houses still surpassed $1 million for the first time.

In February 2020, the average cost was $910,142, according to The Toronto Regional Real Estate Board. This year, it increased by 14.9% to $1,045,488 for the same month. COVID-19 may have slowed down most other industries, but not real estate. The rising cost of home resales indicates high demand, with total residential transactions increasing by 52.5%, from 7,193 to 10,970 for the same period.

During the early days of the pandemic, there were fears that the rising cost of Toronto real estate may finally end. As the numbers show, any trepidation was premature. If anything, sales even increased, driving up prices. One plausible explanation for this “phenomenon” is that the unique circumstances brought about the need for more living space. Adults need more space to work at home. Children and young adults, on the other hand, also need more space to study online.

Cost of Toronto Houses

Which type of house do you need and how much does it cost, on average?

Note: The figures cited are for February 2021, compared to the same period a year ago.

Single-family detached home:

• Average cost: $1,371,791 (an increase of 23.2%)
• Number of Units sold: 4,943 (an increase of 42.2%)

Semi-detached home:

• Average cost: $1,050,820 (an increase of 20.4%)
• Number of Units sold: 977 (an increase of 51.0%)

Townhouse:

• Average cost: $941,037 (an increase of 28.7%)
• Number of Units sold: 1,062 (a decrease of 6.8%)

Condo:

• Average cost: $808,566 (an increase of 19.6%)
• Number of units sold: 3,154 (a decrease of 17.4%)

Sample Computation of Buying a House in Toronto

The Canadian Retail Estate Association reports that the MLS benchmark price for houses sold in the Greater Toronto Area is $969,600 in February 2021. For the same month a year ago, it was $844,600 – a 14.8% increase.

Based on the benchmark price, $969,600, how would it cost you?

Note: The figures here are for reference purposes only.

Buying Price: $969,600

	10% DP	20% DP
Downpayment	$96,960	$193,920
Mortgage insurance	$27,052	$0
Total Mortgage Required	$899,692	$775,680

Amortization Type: 5-Year Fixed

	10% DP	20% DP
Amortization period	25 years	25 years
Mortgage rate	1.68%*	1.68%*
Monthly Mortgage Payment	$3,672	$3,166

*CanWise Financial as of March 29, 2021

Land Transfer Tax (LTT): $31,734

• Provincial: $15,867
• Municipal: $15,867

First-time home buyers can get a rebate of $8,475, bringing down the LTT to $23,259.

Required Cash to Purchase a House

	10% DP	20% DP
Downpayment	$96,900	$193,920
PST on mortgage insurance	$2,164	$0*
Land Transfer Tax	$23,259	$23,259
Lawyer Fees	$1,000	$1,000
Title insurance	$970	$970
Home inspection fees	$500	$500
Appraisal fees	$300	$300
Total Cash Required	$125,153	$219,949

*Rebate deducted from the LTT

Monthly Expenses

	10% DP	20% DP
Mortgage payment	$3,672	$3,166
Property tax	$808	$808*
Monthly debt payments	$0	$0
Utilities	$148	$148
Property insurance	$50	$50
Phone	$40	$40
Cable	$60	$60
Internet	$45	$45
Total Cash Required	$4,823	$4,317

From $600,000 to $10,000,000+

Toronto is one of the best places to live in Canada – and certainly not the cheapest. In the past 2 to 3 years, its real estate property market has seen an unprecedented increase in value. Until the end of the year, the trend indicates the cost of houses will continue to rise.

February 2021 goes down in history as the first time that the average cost of houses in Toronto breached the $1 million mark. For some people, it may be a cause of concern. However, others can view it as expensive today, cheap later as prices continue to surge. Whether you should buy a house now or not, that is a matter of affordability and necessity. At any rate, there are plenty of excellent choices that fit all sorts of budgets. Choose from $600,000 single-family detached homes to grand mansions in luxurious neighborhoods costing more than $10 million.

Conclusion

Purchasing a home in an ever-growing market like Toronto can bring a huge range of benefits. That said, you need to familiarize yourself with the different steps you need to take, work with a reliable real estate firm, and understand home prices in Toronto before making any decisions.

We hope that our article helps you choose the best home type for your family based on your budget. To learn more about home prices in Toronto or how to work with our team of local real estate experts, contact us today.

Sources:

National Bank of Canada, 2021, Housing Affordability Monitor, www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/housing-affordability.pdf.

McClelland, Colin. “Canadian Mortgage Rates Are the Lowest in History. Can They Go Any Lower?” Financial Post, 28 Sept. 2020, financialpost.com/real-estate/mortgages/canadian-mortgage-rates-are-the-lowest-in-history-can-they-go-any-lower.

“Market Stats.” Toronto Regional Real Estate Board, 3 Mar. 2021, trreb.ca/index.php/market-news/market-stats.