Here, listen to a Canadian who actually knows economics. Note that the 416 is Greater Toronto, but this applies at least two-fold to Hongcouver.
Dick and Jane (not their real names) want to buy a SFH in 416. It costs $1,145,892 (the average). With land transfer tax, but not counting other closing costs, the actual price is $1,184,677.
D&J have no choice but to cough up a 20% downpayment, since no lender will provide them with CMHC insurance on the mortgage amount. If default coverage was available, they could get away with 95% financing. But for almost seven years now there’s been a million-dollar cap, imposed by Ottawa. That made sense in 2012, when the same house was changing hands for $728,800.
So these guys need to have $230,000 in cash, plus another $39,000 for closing taxes in order to buy, with a mortgage exceeding $900,000. Monthly payments will be about $4,700. Adding in property tax, heating costs and insurance brings that to $5,700. The allowable GDS (gross debt service) ratio is 35%, so Dick & Jane must earn $170,000 to pull this off.
That’s seven times the national median income, and just twenty grand below the threshold for being in the top 1% of all individual earners. And, sadly, $1.1 million currently doesn’t buy prestige in Toronto.