The housing market in Canada is very hot and it is becoming a huge issue for Canadians. Citizens are most affected in large cities such as Toronto and Vancouver, where real estate prices are so high that most people cannot afford to buy a house in these densely populated areas. This is causing residents to consider alternative living arrangements that they did not have in mind when they began their search for a new home.
Due to the prices in the market for a single family home being so high, condo living is becoming even more popular than it was in the past. Town houses are also increasing in popularity because people want to live in the city, but cannot afford to purchase a detached, or even semi-detached house. Another trend that is developing because of the exorbitant prices in major urban centres, is the willingness to live in the outskirts of large cities. Even though this drastically increases their commute time, they have no other choice. For some, purchasing anything at all is too expensive for them, and thus they are forced to look for an apartment for rent. Some people have no other options besides renting, or in some cases, moving back in with their parents.
The average price of a detached house in Toronto is well over $1,000,000 and that is an average price, for a less than desirable home. That price represents more than a 30% increase from the same time last year. What was once the price of a dream home is now the price of an average home that in a lot of cases, is torn down immediately after closing so that the owner can have a new house built. Using this price as a benchmark, let’s compare it to other large cities, to see what $1,000,000 will buy you in the real estate market.
Honk Kong is the world’s most expensive market for real estate. The average house price to household income ratio is nearly 20, meaning that the average house costs roughly 20 times more than an average family earns in a year. For $1,000,000, in Hong Kong, you can buy a studio apartment. That is a ridiculous amount of money for such a small living space.
New York City
Real estate prices in Manhattan have nearly doubled in the last decade, and the average price roughly $3,000,000 in 2016. In the most sought-after borough in New York, $1,000,000 will buy you a one bedroom, one bathroom apartment. This makes the prices in Toronto not seem so bad after all.
The real estate market in Berlin has experienced healthy growth recently; home value has increased by almost 50% in the past 5 years. In Berlin, $1,000,000 will buy you a 3 bedroom, 2 bathroom townhouse.
Prices have increased by nearly 20% year-over-year and the average house price to household income ratio is around 12, meaning that a house costs 12 times more than what an average family earns in one year. So what can you get for $1,000,000 in Sydney? A 1 bedroom, 1 bathroom condo.
Upon further review, the prices in Toronto don’t seem so bad compared to other large cities around the world. This does not mean that the prices in Toronto are fine, it just puts it into perspective and lets us know that it could be much worse. Many homeowners are thrilled with the high price of real estate, and are looking to cash in so they list on MLS® to earn a return on their investment. Once upon a time, having $1,000,000 meant that you were rich, now, you cannot even afford to purchase an average home in Toronto.