Real Estate

What income level should you be able to afford a starter home in gta/gva?

  • Last Updated:
  • May 30th, 2018 12:42 pm
Deal Addict
Apr 21, 2014
2321 posts
1106 upvotes
Alberta

What income level should you be able to afford a starter home in gta/gva?

There are tons of threads from bulls/bears. I understand that home ownership is not a right, but at what wage do you think it would be “fair” for a couple to afford a home? This is hypothetical.

I’m talking about a starter home (townhouse/semi detached/small detached). Should a couple making 70k combined be able to purchase a home? Etc. assume they have saved their entire base salary as a downpayment.

As it stands right now a couple making 100k with no debts can qualify for a mortgage of 458k. That means with 100k down they can get a home max 558k. That seems reasonable for a starter home in the gta or gva right?
62 replies
Deal Addict
Mar 20, 2017
1370 posts
1165 upvotes
Sure, there are lots of bungalows/townhouses in Oshawa, Inisfil etc with your budget. 100k down even seems like overkill, since 5% down is also available.
Or buy a condo in Rexdale for same 100k and save money for something bigger, if you survive living in Rexdale:)
Starters are starters, you should not expect a downtown 5-storey mansion anyway, should be happy just if can enter the market at all, because it makes you top 20% of population.
Deal Expert
Feb 22, 2011
16521 posts
21871 upvotes
Toronto
This is a bit of a silly question if you ask me. It's like saying how much should an iphone cost? Should minimum wage workers be able to buy it with 1 week pay?
Banned
Mar 13, 2018
1385 posts
679 upvotes
abc123yyz wrote: There are tons of threads from bulls/bears. I understand that home ownership is not a right, but at what wage do you think it would be “fair” for a couple to afford a home? This is hypothetical.

I’m talking about a starter home (townhouse/semi detached/small detached). Should a couple making 70k combined be able to purchase a home? Etc. assume they have saved their entire base salary as a downpayment.

As it stands right now a couple making 100k with no debts can qualify for a mortgage of 458k. That means with 100k down they can get a home max 558k. That seems reasonable for a starter home in the gta or gva right?
70k combined? Lol

They working min wage?
Deal Expert
Feb 22, 2011
16521 posts
21871 upvotes
Toronto
abc123yyz wrote: There are tons of threads from bulls/bears. I understand that home ownership is not a right, but at what wage do you think it would be “fair” for a couple to afford a home? This is hypothetical.

I’m talking about a starter home (townhouse/semi detached/small detached). Should a couple making 70k combined be able to purchase a home? Etc. assume they have saved their entire base salary as a downpayment.

As it stands right now a couple making 100k with no debts can qualify for a mortgage of 458k. That means with 100k down they can get a home max 558k. That seems reasonable for a starter home in the gta or gva right?
I find it really funny that condos are over 50% of real estate in Toronto and you don't seem to think they are the starting home. You list townhouse/semi detached/small detached.
Deal Guru
User avatar
Nov 6, 2010
10018 posts
1967 upvotes
Montreal, QC
The short answer is always "it depends".
  • Does the couple have kids?
  • Does the couple have 1 car? 2 cars? No cars? Walking vs public transit?
  • How make or break is the location of the property (ex: near a parent that needs medial care)?
  • Does the couple need access to services like schools, community centres etc.
Real estate is never a simple equation for most people, especially when it comes to your primary residence since living factors now come into the equation alongside financial ones.
Even financial ones aren't straightforward. What you "can", and "should" afford will not only be dictated by what the bank is willing to give you, but also by the above factors (among others).
Deal Fanatic
Oct 7, 2007
9404 posts
5374 upvotes
In Vancouver, the last couple of months of VREB data show downward trends in pricing so this may be a changing situation. If I were looking to buy and I had cash for a down payment, I would probably wait for a price decrease even if mortgage rates go up a bit because the savings could be substantial.
Deal Addict
Dec 4, 2016
2011 posts
1030 upvotes
A starter home in GVA is probably a one bedroom in Surrey. You can get a relatively new one for 400k, so I guess that's fair. Two people making $15/hr can probably afford it, if they don't own a vehicle.
Deal Addict
Apr 21, 2014
2321 posts
1106 upvotes
Alberta
Reason I’m asking this hypothetical, is people keep saying that real estate is out of reach for millennials, and people going into the workforce today can not afford homes.

If a couple making 150k can’t afford a home then I would probably agree with this sentiment. But if a starter home can be had with an above average income then it’s not too overvalued. Especially since you will pay a premium to live in those major cities.
Deal Expert
User avatar
Jun 3, 2005
28753 posts
1370 upvotes
PunkeyDoodles Corner…
OP, you don't have to worry about hypodermical scenarios as you're on RFD, where everyone falls ass backwards into a $250K job straight outta high school.

Live a little...heck why not throw caution to the wind and use an actual username instead of that weird one you got now.
PayTM$154, dead. SDM: $5342 Rakuten: $181.98
100% Established: BST; Heat; FB market; Kijiji *BST: FS Mens Shoes & Boots: Viberg, Allend Edmonds, Red Wings, misc,*
*Various Szs Vintage: Florsheim Imperial
Deal Addict
Dec 4, 2016
2011 posts
1030 upvotes
abc123yyz wrote: Reason I’m asking this hypothetical, is people keep saying that real estate is out of reach for millennials, and people going into the workforce today can not afford homes.

If a couple making 150k can’t afford a home then I would probably agree with this sentiment. But if a starter home can be had with an above average income then it’s not too overvalued. Especially since you will pay a premium to live in those major cities.
Well, people naturally compare themselves to their parents' generation, at the same age. If they have similar or higher education than their parents, they naturally feel they should have same quality of housing (location, size, and density) as their parents. In the rust belt of US, much of the anger could be attributed to the loss of unionized manufacturing jobs available to men with only high school education. Similar sentiment in GTA, but with housing instead of jobs.
Deal Addict
Apr 21, 2014
2321 posts
1106 upvotes
Alberta
bubble.tea wrote: OP, you don't have to worry about hypodermical scenarios as you're on RFD, where everyone falls ass backwards into a $250K job straight outta high school.

Live a little...heck why not throw caution to the wind and use an actual username instead of that weird one you got now.
Lol. I’m not a millennial mid to late 30s actually. Was just curious as to what people think is a fair price for a home. A lot of people feel they home ownership is a right and the average to below average income earners should have a detached home with a white picket fence. This may be the case in cities outside Toronto or Vancouver, but not if you live in the big city.
Deal Addict
Jan 20, 2016
2028 posts
1013 upvotes
Houston, TX
abc123yyz wrote: Lol. I’m not a millennial mid to late 30s actually. Was just curious as to what people think is a fair price for a home. A lot of people feel they home ownership is a right and the average to below average income earners should have a detached home with a white picket fence. This may be the case in cities outside Toronto or Vancouver, but not if you live in the big city.
It really depends on family size and location. There are dozen 1-2bdr condos below 250k in Totonro itself, quite affordable for couple making 70k with 20% DP.
2/3dbr TH could be found in GTA for 300-400k, which I'd say require rather 100k yearly income, but again it depends on DP size and other expenses.
Make the face great again
Sr. Member
Sep 9, 2014
627 posts
594 upvotes
Vancouver
In Vancouver or Toronto, the fact is that an upper middle class family won't be able to buy a detached right away. Not without some help from the parents for instance. But they can definitely buy a starter home like a condo, live there a few years and hope for market gains.

As for whether this is what it should be... I don't know. Everybody wants to live in these nice big cities. So you gotta pay the price. For me, as long as a middle class family can afford a 2 bedrooms not 2 hours away, the situation is fine.

I think the main problem I see is that many young people think they have a birth right to own a house in the best neighborhood of these cities. It's funny to me because even 30 years ago, the famous "blue collar" families who supposedly were able to buy right away... Bought in the suburbs, far.

I'm not saying RE hasn't become relatively more expensive but I also disagree that it used to be super accessible to everyone and is now limited to the 1%.
Deal Addict
User avatar
Jul 8, 2010
1459 posts
1176 upvotes
Ontario
rjg4235 wrote: This is a bit of a silly question if you ask me. It's like saying how much should an iphone cost? Should minimum wage workers be able to buy it with 1 week pay?
Always back to the same thing that troubles you. Why someone with minimum wage can buy an Iphone or drink an S'bucks every day....
Member
Oct 18, 2015
388 posts
279 upvotes
Vancouver, BC
I think the cashflow is more important than income level, and it really depends on how badly you want to work for it.

Let's say you make roughly $45K per person before tax -- roughly 90K together, or ~60K between the two of you after tax -- if you are willing to commit to at least 50% of it going to mortgage (pretty high), and have no other obligations (e.g., family to support, student loans, etc.), that's 30K a year or $2500 a month. Assuming you have some downpayment, you can do a $500K townhouse, which is quite decent already.

The 50%, of course, do not include maintenance, condo fees, etc. So you might need to adjust.
Deal Guru
User avatar
Mar 31, 2008
13011 posts
3095 upvotes
Toronto
55K each in Ajax townhouse.
Deal Guru
Feb 9, 2009
12381 posts
11307 upvotes
Isostar wrote: Always back to the same thing that troubles you. Why someone with minimum wage can buy an Iphone or drink an S'bucks every day....
Well he’s right — if your minimum wage earner what are you doing buying iPhones and Starbucks?
Deal Expert
User avatar
Jan 27, 2004
52937 posts
18145 upvotes
ONTARIO
bubble.tea wrote: OP, you don't have to worry about hypodermical scenarios as you're on RFD, where everyone falls ass backwards into a $250K job straight outta high school.

Live a little...heck why not throw caution to the wind and use an actual username instead of that weird one you got now.
MAybe he/she is a grade 1 teacher who likes to travel. Hence the abc123yyz :)
Deal Addict
Apr 21, 2014
2321 posts
1106 upvotes
Alberta
UrbanPoet wrote: MAybe he/she is a grade 1 teacher who likes to travel. Hence the abc123yyz :)
Lol. Stop hating on my username :). I make well above average salary and actually don’t even live in Toronto anymore. Am in the states now. I just see all these threads on real estate bears and bulls and just wanted to get an idea on what people think is fair to live in metropolitan cities such as Toronto and Vancouver.

Top