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Rates are still low and the Toronto real estate market is still very much in a seller’s market. Currently, there is tight supply in most desirable neighbourhoods, downtown condos are still moving quickly and pre-construction sales are brisk. Undoubtedly, growing prices has many worried because of increased debt loads. As a result, expect to hear more great sound bites warning Canadians against over leveraging themselves from the Bank of Canada or the Federal government in an effort to cool sales. So this begs the question, can Toronto handle continued price appreciation for the next two years? To answer this, we’ll take a look at some analysis done by Jason Mercer from the Toronto Real Estate Board. Jason has made the following assumptions:

  • Household income growth will continue to increase with current rates
  • 5 year rates will go up by 1.2%
  • People will get a mortgage based on a 32% GDS and a 20% down payment

And the grand number is: $464,000 (current average price is $427,037 – Toronto Real Estate Board). Note: Mortgage qualification is not always based on a 32% GDS, some people could qualify for more or less depending on their situation. image source: Images_of_Money