The last time (which was also the first time) this happened here was a in 1989, which brought houses down from about an average of $500k to a more affordable $250k level, however, the prices started inching up again since then.The last time you would have been able to get ‘in’ at an affordable level in Toronto at around the $400k level would have been 2007–2010.Since then, prices have increased exponentially in Toronto and that same house is now worth more than $1million.
For many people on decent incomes in Toronto, $400k is the edge of affordability and as interest rates decreased housing prices increased accordingly.The winners in every case are the banks because they are keeping people paying at the edge of their ability to pay and because of demand, the prices keep edging up.Add to this the fact that property taxes are levied based on property values and you get even more money being doled out in taxes.
Add to this the Hydro rate hikes of the past years and you have people subsisting, while at the same time, owning their home.The prices have now forced many out of home ownership and more people are seeking rental properties which is driving up rents in Toronto as well, so rentals are also becoming unaffordable.So to answer your question, the average person cannot buy a house.
You have to be an above average earner, and you most likely would have to have 2 such earners in the household contributing to paying the monthly costs and expenses, and then you’ll just be scraping by.To answer ‘when will the market correct itself’, it depends on several factors… The first is interest rates.As interest rates rise, it allows fewer people able to afford to service the mortgages which will necessitate a correction, meaning more people will be forced to sell due to increased monthly costs, some will abandon, some will be foreclosed meaning there will be more supply and less demand, some will get while the getting is good, so sellers will have to lower their expectations to sell.
The second factor is population growth.Ontario’s population has grown by 2 Million people since 2001 and many of those seek to live in the GTA and Toronto proper.Ontario’s population is expected to grow another 4 to 8 million in the next 25 years and likely 40–50% of those will likely want to move to GTA.
With more people seeking housing, demand will remain high until construction can catch up.
The market is starting to correct itself.My neighbourhood has dropped maybe 30% in a year or two.I have seen it drop faster back in the 1990’s.
The other issue is the number of unoccupied houses.In my neighbourhood in North York, there are all kinds of them.They are either houses which developers have bought for “inventory “ or brand new houses where the developer thought that they would hold onto to see if the prices would rise.
So they just sit there unoccupied, heated, taxes paid on it, etc.It probably costs them $20,000 to hold it.Basically, it is sad.
The market is market.Unless some calamity happens, I don’t think that market will get corrected.Whatever correction that can take place, has already taken place – in my opinion.
Now the market is almost in equilibrium position.Good transportation to Toronto may help you to look for value or budget properties, at a little distance, but well connected to Toronto.
It’s not about the Canadian born issues here the prices of homes are been systematically created to the availability of cheap loans few years back .Fortunately the ministry cancelled the 40 years amortization plans or else ppl will be paying till death on mortgages.This creates the demands for housing which pushes up the ridiculous prices.
My advice to newcomers is to invest in one 2 BHK condo and sell it within 1–2 yrs and earn profit of 100–150k.
Put this money as 20% down payment for the house.
Go from there.