Toronto’s condominiums are continuing to soar in price — but a new study has found that there are still areas in the city where less than a year’s worth of rent is enough for a down payment.
New research from real estate brokerage and website Zoocasa Realty Inc. ranks 35 neighbourhoods in the 416 by the amount of time it would take to save for a condo down payment if you didn’t have to pay local rental costs.
The most affordable condos were in West Hill and Centennial Scarborough, where it would take 7.7 months’ worth of rent for the minimum down payment on a condo. The least affordable were in Yorkville, Annex and Summerhill where it would take more than 74 months.
For the City of Toronto as a whole, an average renter would need to save the equivalent of 14.7 months of rent to come up with the minimum $37,807 down necessary to purchase the average condo apartment unit priced at $628,074.
Not an easy feat for those who do have to pay rent, but a potential scenario for the nearly 50 per cent of young adults Statistics Canada says live in the family home.
Neighbourhoods where it would take the least time to save for a condo are largely located in both the eastern and western edges of the city and away from the core, including West Hill, Malvern, Rouge, Black Creek and Rexdale.
The priciest neighbourhoods are mostly clustered around midtown and include North York as well as in the south of the city. These neighbourhoods, including Rosedale-Moore Park, Yorkville and York Mills, all have walkable amenities nearby and close access to major highway arteries and public transit.
Zoocasa calculated the minimum down payment required to purchase the average condo unit in each neighbourhood, as well as the number of months of rent that would be equivalent to the down payment amount. It arrived at the comparison using Toronto Real Estate Board (TREB) data against a backdrop of rising rents in Toronto, where vacancy rates for all rental units hover at 1.1 per cent and are a scant 0.7 per cent for condo apartment rentals specifically.
According to the latest real estate board Rental Report the average one-bedroom condo apartment rental unit in the city fetched $2,262 per month — an increase of 4.5 per cent — in the third quarter of 2019, while the cost of a two-bedroom rose 4.2 per cent to an average of $2,941.
Rental market conditions remained very tight — as evidenced by average annual rent increases double the rate of inflation. However, the pace of average rent growth has slowed over the past 12 months as listings accelerated, said Jason Mercer, chief market analyst with TREB. “This suggests that renters are benefitting from more choice in the marketplace.”
And while affordability across Canada as a whole has improved this year on rising incomes and declining mortgage rates, a new National Bank Financial research note says conditions remain “difficult” in Toronto and Vancouver thanks in part to surging population growth in the country’s largest metro areas.
Still, Zoocasa says there is some good news for those looking to move into the Toronto home ownership market. According to its study, there are 13 Toronto neighbourhoods where it would be possible to save for the necessary minimum condo down payment within 12 months if no rent is paid during that time period.
On the other end of the scale, the Yorkville, Annex, Summerhill area where the average condo price is $1,193,506 and the minimum down payment exceeds $238,000 requires the most rent-free time to save up a down payment of the neighbourhoods examined at more than 74.3 months.