A housing boom in the Toronto area is masking the growing challenges to the market, according to a report from TD Economics released Monday.
The report said experts have been distracted by a housing boom in the Greater Toronto Area, with resale value increasing steadily over the past 10 years.
The 20-page report was prepared by together by TD’s Deputy Chief Economist and Vice President Derek Burleton and Economist Diana Petramala. Read the full report online.
More people are moving to the GTA, leading to an increase in demand for homes. And it’s that increase in demand that is also partially to blame for the raise in housing costs, the report said.
But that boom also created jobs in the area. TD estimated that about 25 per cent of jobs created in the last decade were in some way related to the housing boom.
However, the report said that media coverage of the boom has overshadowed growing challenges to the market. Many can’t afford to own homes, and there are very few options. The report also criticizes public transit in the Toronto area.
Here are five numbers from the report that may surprise you:
1. Nearly half of GTA renters are spending 50 per cent of their pay cheques on rent. TD looked at earners in the bottom 40 per cent, and found that average rent was about half of their annual income.
TD also found that those with higher income levels and homeowners are also spending similar amounts on housing.
“What’s more, rising costs have been instrumental in driving up average debt-loads in the region, leaving households vulnerable to any unanticipated negative economic shock,” the report said.
2. Likely as a result of the steady growth in resale value, more Torontonians own houses. Approximately 20 years ago, the number of renters and owners in the GTA were split about 50-50. In 2011, the homeownership ration tilted, with about seven in 10 choosing to own.
3. In the 1990s, approximately 25,000 new households were created each year. Since the early 2000s, the average has been closer to 36,000. TD also said that the number of single women owning homes has increased by three percentage points during that period.
4. In the late 1990s, about 40 per cent of new homes built were condo units. By 2014, 80 per cent of new households built were condos, and half of them were built downtown.
5. Condo market and Toronto Community Housing Corporation estimates suggest that approximately 40 per cent of condo units currently under construction will be used as rental properties.
Written By: Kendra Mangione