In order to pay for a typical Ontario home, families earning the local median income need to devote more than 50% of their after-tax earnings to monthly mortgage payments if they live in the province’s 14 urban centers – and that share rises to more than 110% if they live in Toronto.
According to a new report published by the Fraser Institute, mortgage affordability deteriorated markedly since 2014 when the share of median after-tax family income needed for the mortgage payment on a typical home ranged from 21.1% (Windsor) to 56% (Toronto). The report also observed that Ontario worker salaries have largely stagnated over the past decade while home prices spiked, which has contributed to the decline in housing affordability.
“There is a perception that housing outside of the GTA is still somewhat affordable, but that’s not true,” said Austin Thompson, senior policy analyst with the Fraser Institute and co-author of the new report. “Even in cities like Windsor and Kingston, buying a typical home would require a family earning the local median income to spend more than half of its after-tax earnings on mortgage payments.”
“Housing affordability is a function of both home prices and incomes, and as wages and incomes have flatlined across Ontario in recent years, housing unaffordability crisis has worsened,” added Steven Globerman, Fraser Institute senior fellow and co-author of the report. “To make housing more affordable for Ontario families, policymakers should focus on increasing wages and incomes as part of the overall solution.”
