Buying a "starter home" in Toronto is impossible
Family-sized dwellings expensive and are hard to come by
My boyfriend and I have been thinking about buying a place in Toronto. Something a little bigger than where we’re currently living, maybe 1000 square feet or so, that we could grow into in a few years. Something within the city, as we like walkable neighbourhoods and not having to own a car.
We thought it’d be a good opportunity to enter the housing market. We’re extremely fortunate in that we both work in tech and have high incomes. We’re a few years into our careers and have had a chance to save up a decent down payment. At the same time, the housing market has been slow. Properties have been sitting unsold for days. It’s a buyer’s market for the first time since the 2008 financial crisis. Seems like the perfect opportunity, right?
Instead, it feels out of reach.
Yes, we could look for something further out, or in a less desirable neighbourhood, or for something smaller, or a host of other options. But if it’s not people like us who are able to afford these types of places, then who can? And if people like us feels like we’re priced out, then what about everyone else?
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The median price for a townhouse or semi towards the end of 2023 was $1.1M dollars according to HouseSigma. I use townhouses and semis as a proxy for the “family-sized” units that we’re looking for (condos are typically smaller, detached are typically bigger), but we’re actually open to all types.
If you check sales in the past 90 days for our specific criteria (1000-1500 sq ft, downtown; no filter on dwelling type), you can see sales have indeed been around this price, with few properties below $1 million.

In Toronto, a young adult in the 90th percentile of income makes $100,000 per year. (This is based on 2020 income data; if this had tracked inflation this would be ~$115,000 today, but we’ll stick with the 2020 numbers for easy math).

If we take a double-income household, each earning $100,000, they would need a $400,000 down payment in order to qualify for a mortgage to cover the average home. Assuming they had this, their mortgage would cost about $4200 a month. Once you add in property taxes, insurance and utilities, housing costs are estimated to be about $5800 a month – about half of this couple’s after tax income.

Certainly doable, but this doesn’t feel like a lavish life. If one person were to lose their job, the other wouldn’t be able to afford the payments, so it’s tenuous. And again this is for two people in the top 10% of earners for their age group!
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Ultimately, the problem is a chronic shortage of housing supply.
The province has a target to build 1.3 million homes by 2031 (285,000 in Toronto). With housing starts down 7% in 2023, we’re already failing to meet our target.
When housing does get built, it’s primarily condos. In the past few years, condos and apartments have taken over single-detached as the most popular dwelling type to be built, while semi-detached and townhouses are seldom built.

When condos are built, these are typically smaller studio and 1-bedroom units, not larger units.
More types of housing still remains incredible infeasible to be built. Despite legalizing new forms of missing middle housing, uptake has been abysmally slow. Requiring buildings to have two fire exits mean a lot of space is taken up by long hallways, making it difficult to build anything but studios and one-bedrooms. Setback and floor space requirements means buildings are limited by how much space they can use on the lot, leading to smaller-sized units. Angular plane requirements cut sections out of a building with the intent of removing shadows on the streetscape, but can remove up to hundreds of units on a development and force units to be oddly shaped.
So, we’re not building fast enough, and even when we do build, we’re building small units. For those of us who are looking for family-sized units, we’re all competing for the same existing properties. It’s no wonder that prices have remained so high despite general market slowdowns.