Updated: Jun 3, 2021
By Bradley Nasri | Toronto, Canada
It is easy to understand how important housing is anywhere in the world. Having a roof over your head is a human right, or at least it should be. Unfortunately, in the times we live in, this is simply not the case.
As the prices of homes rise across the globe, having a home has become more of a privilege than a right. Toronto is one of the most expensive cities to live in Canada, second to only Vancouver. Over the last decade, Toronto has become the 12th most expensive city in the world to own a home in.
With rent and mortgage prices in Toronto rising at an exponential rate, and the minimum wage rate rising at a less than desirable rate, the cost of living to income ratio gap keeps growing. Torontonians grow more frustrated with the city they’ve come to know so closely. However, there is a limit to every relationship. Doubt and regret fills the minds of Torontonians every time they must open their monthly mortgage statement or rent invoice; a question lingers in the back of their heads, “Is it really worth living here?”
Granted, there are many reasons why one would live in this city – the biggest pull factor being work opportunities. Yet, in an age when the majority of jobs can be conducted remotely, the prior argument is losing its weight. When you consider that millennials are the poorest generation, finding affordable housing is more crucial than ever for the new workforce generation. Unless Canada raises its minimum wages to $18/hr like Norway where there are less homeless per capita, it is on its way to seeing its millennial and Gen Z populations leave the city life behind: expensive housing in Toronto is causing an outflow of people.
Housing in Toronto is just plain unaffordable
Average millennial struggles increased in recent years when banks stopped granting 30-year fixed mortgages to the upcoming generation of home buyers, and instead offered the less risky 25-year fixed mortgages. This decreased mortgage period puts a greater strain on the new generation of home buyers; month-to-month payments will be higher than before. Currently the average home in the GTA costs $858,443. Yet, with the cost of housing in Toronto rising year after year, that cost will consistently rise by 3.7 percent in coming years.
The minimum wage income as of October 1, 2020, is $14.25 per hour. This means that if one were to work 40 hours a week, which is considered full-time, then their monthly income would be $2,280. For the average home in Toronto, even with a 15 percent down payment, the monthly mortgage payments for a 25-year period with a 5-year fixed interest rate of 2.94 percent would cost $3,630 per month.
The math just does not add up, and ultimately means that someone solely subsisting on a minimum wage income must forego the option of buying a home. They are forced to opt for the cheaper alternative – renting.
The current generation is burdened with an obstacle that previous generations have created. What is the point of staying and working in a city as great as Toronto if the majority of its people can’t afford to live in it?
Toronto home prices soar by 6.2% – and they are forecast to keep rising. (2019, October 10. Toronto Star [Toronto, Ontario], NA.)
Gerv Tacadena 4 Feb 2020. https://www.whichmortgage.ca/mortgage-guide/how-much-income-is-needed-to-afford-living-in-toronto/325820
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