A recent survey by one of Canada's big banks suggests that the cost of renting or owning a home in the city of Toronto is climbing out of reach of most residents. The average price of a home in Canada is just over $400,000 and in Toronto, that number in excess of $575,000. Some experts say Canada's biggest city is in danger of becoming the "New York City of the north."
The report, by the Toronto Dominion bank, is raising concerns about affordability and availability of housing in Toronto.
Experts say there is no end in sight to the housing bubble experienced by Toronto, even while they insist prices are at least ten percent higher than they should be.
But real estate agents counter, saying as long as demand continues to outweigh supply, those prices will continue for the foreseeable future, even if there is a modest cooling.
The current situation, according to the TD Economics survey, is in danger of pushing prices beyond the reach of even high income residents.
"You're dealing with a huge sticker shock and a growing gap between those larger properties and the smaller ones," says Derek Burleton, TD's deputy chief economist.
The TD report suggests that the boom in condo construction is partly to blame, at the expense of more single-family homes and townhouses.
"Removing some of the structural barriers that are driving up the cost of land, and leading to a housing stock that's becoming very tilted toward small condo apartments," Burleton adds.
But construction of new condo units has blossomed, in some cases making up as much as 80 percent of new residential construction, nearly half of it in Toronto's core.
With so little affordable housing, renters are getting hit hard as well, with many rents in the downtown more than $2,000 a month or about half of the income of the lowest 40 percent of wage earners.
The TD survey says affordability has dropped to the point where Toronto is not far behind New York.
Economists say it takes 6.5 times the average income to buy a house in Toronto compared to 6.1 times the average income in New York City.
