A house on my walking circuit sold on February 18 for $1,060,000 after 11 months on the market. It was initially listed in March 2023 for $1,798,000 and has been reduced nine times since. The property was relatively modest but updated with a water view and a legal rental suite. Property taxes are $8430 a year. You can see more details on the listing here via Zolo.
The nearly $1.8m ask was huge, to be sure. But at the peak of the cycle, two years ago, many properties in the area were selling around the $2 m mark. Now, those over $1m are sitting, and an increasing number look empty.
According to Zolo, the average asking price in our area (one hour north of Toronto) is $763,000. At that average price, with a 20% downpayment ($152,600), a 5-year-fixed mortgage rate of 5.14% requires a monthly payment of $4,057, not counting taxes, insurance, utilities, and maintenance. The median family income in this area is $99,560, approximately $82k after tax ($6833 in disposable income monthly).
Based on these numbers, today’s average asking price is 7.7x the median household income, compared with a long-standing affordability norm of 3 to 4x. To buy a home at the average asking price, the median family must allocate 60% of their after-tax income to the mortgage payment alone. Horrendous.
This kind of housing market remains vulnerable to gravity and the reality of household income. With spring arriving early, new listings are on the rise.
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