By Karin Mizgala, co-founder and CEO MoneyCoaches Canada
Buying a home, especially for first time buyers, has become increasingly challenging over the last decades. In 1985, according to the Toronto Estate Board, the average home in the city sold for $109,094 and the average Torontonian was earning $31,956. That’s means if you put your entire salary towards a home, it would have taken you 3.4 years to pay it off in 1985.
According to Statistics Canada the median salary for a Toronto family in 2017 was $83,000. Assuming a 2.5% average salary increase, that would be $89,000 in 2020. That’s a significant jump from 1985, but according to the Toronto Real Estate Board the average price for a detached house in the city of Toronto in 2020 is $1,163,000. So despite that increased annual wage, putting your families’ entire salary towards your home, it would now take 13 years to pay it off.
It’s true that cities like Vancouver and Toronto are known for having high housing prices, but even smaller cities like Ottawa are becoming more challenging for first time buyers. A shortage of available houses in that city has created a bidding war situation, with highly desirable properties often selling far above the asking price.
Young adults, many of whom are already carrying an average of $25,000 in student debt, look at the high cost of entry to the market and wonder how home ownership will be possible for them. And many of them are turning to mom and dad for help.
Parents, often homeowners themselves, know that getting into the housing market can provide their child with stability, security and financial growth, so it’s very tempting to want to help them realize their goal.
But help of this sort doesn’t happen in a vacuum, it can have a huge impact on your life and your relationship with your kids. It’s vital that you answer these three questions before you start visiting open houses. Continue reading