There is lots of talk about the lack of affordable housing in Toronto and other cities in the GTA and we decided to do a dive into what constitutes “affordable” and whether such homes exist these days. The somewhat surprising answer is that yes, there are some homes in Toronto that are affordable. Well, there are about 2,000 condo apartments that fit the bill, and, let’s see, two houses that qualify.
Let’s examine what constitutes “affordable” and then look at what options exist in the city.
Some Quick Math
If we look at the average income in the city of Toronto (about $132,000) and we take the recommended maximum people should spend on housing (32% of gross income), we’re left with about $3,530 to spend on a monthly basis on your mortgage and property taxes. If that doesn’t sound like it would give you much of a budget, you’re absolutely right.
At current rates, you could get a $500,000 mortgage for about $3,080 a month in principal and interest payments. That’s based on a five year fixed rate of 5.6%, amortized over 25 years. Add in property taxes of about $5,000 per year and you’re looking at monthly housing costs of about $3,500. If we say you’ve got the 20% downpayment of $100K, that gives you a budget of $600,000.
While that’s not the highest budget, it does give you some options for homes that qualify as affordable using the above rationale. Let’s review.
Affordable condos for everyone!
As of June 14, 2024, there are over 2,600 available condo units for sale in Toronto that are listed at below $600,000. The median price is about $548,000 so there is definitely a huge amount of affordable housing options on the condo side of the equation.
With prices starting as low as $275,000, our condo market is truly the saving grace in the city for people who want to own real estate but have limited budgets. If you are interested in a condo, you’ve got a huge amount of options across the city. What about if you’re dreaming of a freehold home in Toronto?
Eight options isn’t bad, right? Wait, are they options?
When we search for freehold houses for sale in Toronto as of June 14, 2024, we have 3,160 properties on the market. The median price for those homes is about $1.649M, which puts them about one million dollars more than what we’re saying is “affordable” for the average Torontonian.
If we set a maximum price of $650,000, that number drops from over 3,000 options to just eight properties. Four of them are properties listed at $1, which is a marketing tactic designed to draw attention to the listing. None of the four properties are actually available for purchase for anywhere near $600K, so we’ll remove them from the equation.
One of the four remaining properties is a property that was previously listed for $898,000 and is now listed at $599K with an offer date. If they wanted almost $900K before, they likely wouldn’t take anything even close to their current list price, so we’re going to remove it as well.
That leaves us with three properties. Well, actually, two properties and one houseboat. Yes, that’s right, one of the three affordable freehold homes in Toronto is in fact a boat. For just $649,000 you can own a one bedroom, one washroom houseboat in the Scarborough Bluffs.
Let’s look at the two options for affordable freehold homes you could purchase in Toronto as of today.
Dundas & Annette Semi-Detached for $600,000
The most affordable listing for a freehold home in Toronto, this semi-detached house sits on a reasonable 19 ft wide by 88 ft deep lot in the Junction neighbourhood. It’s got three bedrooms, plus one in the basement, and a full bathroom on the 2nd floor and a powder room on the main floor. There’s no parking but it’s located on a small side street off of Dundas, so street parking is an option.
If you’re wondering why it’s so cheap, it does come with a few caveats. There’s no AC in the home, nor is there central heating, as the heating is provided by baseboard and electric heaters.
In addition, it is tenanted and there are no pictures of the interior, so it seems likely that the home isn’t in great shape. That is reinforced by the fact that in the listing it says “The seller provides no warranties regarding the structure, electrical, plumbing, foundation, roof, furnace, condition, sizes, air quality, or AC/heating units.”
In short, it’s an affordable home, but it is likely in need of some significant renovation. Installing AC and central heating will cost a fair bit and if there are structural issues, problems with the roof or the windows, then costs will rise quickly.
It’s been on the market for 23 days as of today, so there might also be a bit of flexibility on that list price.
Davenport & Caledonia Townhouse for $635,900
Our second affordable option for a freehold home is located just a few blocks north east of our first home, up in the Pelham Park neighbourhood. It’s a townhouse that sits on a 15 ft wide by 120 ft deep lot and while there is no parking, the deep lot could allow for a garage or even laneway house off the public laneway behind the property.
It is listed as having three bedrooms, plus two more in the basement, with just one full washroom on the 2nd floor. It has an unfinished basement and the heat is provided by forced air but with an oil tank, and there’s no air conditioning. Originally listed at $729,000, it’s been on the market for 35 days as of today and is now listed at $635,900.
This is an estate sale and once again the home is being sold in “as is, where is” which means buyer beware. The home is brick, which is a good sign, but the photos definitely show some signs that the house has settled significantly in its 100 plus years of existence.
Both the front porch and the rear porch look pretty worn and the interior is very dated and basic. There is evidence of knob and tube wiring in one of the photos and it seems likely the walls are all lathe and plaster.
In short, it would require a to the studs renovation, with all new electrical and plumbing as well as AC and heating.
Add in drywall throughout, windows and flooring and even before you get to putting in fixtures you’re looking at significant costs.
If you’re looking for affordable housing in Toronto, it seems like condos are the only option as of mid-June, 2024. While there are technically two freehold homes that qualify as affordable, both require significant renovation that would likely push the cost up by at least $100,000.
If you like the idea of finding a home that needs significant work and making it your own, we’d love to help you find the best option. Get in touch with us to start the ball rolling!
