Every couple of weeks I like to sit down and go through the housing news that actually matters for people buying and selling in Toronto. In early August 2024 three stories stood out, and they all connect back to the same theme: the cost of owning, and the cost of living, in Canada right now. I'm Moe Asgarian, Principal Real Estate Broker in Toronto, ranked #47 worldwide at RE/MAX. Here is what I'm watching and why it matters for you.
How much tax a Canadian family really pays
There's a new figure out from the Fraser Institute, and it's an eye-opener. We tend to say healthcare in Canada is free, but once you look at how much of a household's income goes to taxes, that word 'free' starts to feel a little generous. In 2023 the average Canadian household earned about $109,000. Of that, roughly $47,000 went to taxes. That's about 43% of the family's total income. For comparison, that same household spent around 35% on food, housing, and clothing combined. Read that again: the average family pays more in tax than it spends on the basics of living.
1961 versus today
The report goes back decades, and the contrast is sharp. In 1961 the average household income was about $5,000 a year, and the tax bill was around $1,657. That worked out to roughly 33.5% of income going to tax, while essentials took about 56%. Flip those two numbers over sixty years and you see exactly how the cost of living has shifted. Here's the part that matters for real estate: when income tax climbs, buying power drops. Less money in people's pockets can slow the whole economy over the long run, and it's one of the quiet forces pushing first-time buyers further from the market.
Four out of five condo investors are losing money
The second story is about the GTA condo market, and it's a tough one. A CIBC study found that roughly four out of five investors who bought a GTA condo to rent out are currently losing money each month. They're topping up out of pocket to cover the mortgage and carrying costs, because the rent doesn't cover them. The 2024 numbers put it at 81% of investors in newly built condos running negative cash flow. Negative cash flow simply means the monthly costs, the mortgage, condo fees, and property tax, add up to more than the rent brings in.
What this means if you're a buyer
Now, if you're an end user, someone who actually wants to live in the place, this shift has an upside. Prices have come down, and the number of condos on the market has gone up, so you have more to choose from. For investors, cash flow isn't the only thing that counts; appreciation matters too. Plenty of owners are willing to carry a unit month to month because they believe its value keeps climbing and they'll sell well later. If you want to turn negative cash flow into positive, one lever is a larger down payment. Instead of putting down 20%, going to 35% can change the math on a unit. With interest rates easing by half a point, we'll see whether that pressure lifts.
A broader warning for investors
The third report, also from CIBC, looks at the whole Canadian market, and it doesn't pull punches. It calls this one of the worst housing markets Canada has seen in decades and warns that a lot of investors are heading for the exits in Toronto. Much of the strain traces back to condos, where inventory has piled up and prices have softened. Again, good news for the end user, harder news for the investor. Keep in mind the GTA varies neighbourhood by neighbourhood, and cities across Canada are in different spots. But the overall message is clear: right now the market is kinder to buyers than to investors.
On our team, watching and reading this market is exactly what we do for our clients, whether they're buying or selling. If you'd like a second opinion on your own situation, fill out the form at the bottom of this page or book a free consultation. Stay well and take care.
Frequently asked questions
How much of their income do Canadian families pay in taxes?
According to the Fraser Institute, the average Canadian household earned about $109,000 in 2023 and paid roughly $47,000 in taxes, about 43% of total income, which is more than it spent on food, housing, and clothing combined.
Why are so many Toronto condo investors losing money?
A CIBC study found about four out of five GTA condo investors have negative cash flow, meaning their mortgage, condo fees, and property tax cost more each month than the rent brings in. For 2024 that figure was about 81% among newly built condos.
Is this a good time to buy a condo in Toronto?
For end users who plan to live in the unit, the current market has advantages: prices have eased and inventory is high, so there is more to choose from. Investors face a tougher picture because of negative cash flow.
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