This Is Why You Can’t Afford A Home
A case study on one of the world’s hottest real estate markets
The Canadian housing market is HOT, regardless of the ongoing pandemic. So hot that it was recently ranked as the third biggest housing bubble in the world. House prices have risen by over 22% in the last year. This is despite national unemployment rates still hovering over 8%, which is the highest that it reached during the Great Recession.
If you thought there was a lot of hype around GameStop and cryptocurrencies, you haven’t seen anything yet. There are countless stories about houses receiving dozens of offers and selling for hundreds of thousands over the asking price. This, however, is not a new trend. In 2016 I moved to Toronto and bought a small condo for a modest $300k. Three and a half years later I sold it for over $500k, $200k of profit for doing absolutely nothing! Houses in Toronto are expected to reach $1 million for the first time later this year. Just 10 years ago you could expect to pay closer to $400,000 for a house, million-dollar homes were unheard of. Why have things changed so drastically over the last decade?
Interest rates determine which house you can afford
The purchase of a home is almost always financed through a mortgage. The fact that loans…
