September was a record-breaking month for home sales in the GTA, as more city-dwellers reassessed their housing priorities in search of homes with higher square footage. Housing demand in the City of Toronto was a true reflection of this trend, with detached house sales growing 28% y-o-y (vs. a modest 7% increase in condo apartment sales) and 1,161 homes changing hands. The median home price for detached properties in the City of Toronto for September 2020 was a staggering $1,185,000 (+10% y-o-y); meaning half the detached houses sold during the month sold for less than this amount, while the other half sold for more.
Zoocasa took a closer look at median house prices for detached houses in 35 neighbourhoods across the City of Toronto to understand where there may be pockets of opportunity for aspiring buyers seeking a lower barrier to entry for a detached house. We highlighted neighbourhoods where the median detached price is under $1,000,000 and for every neighbourhood included in our analysis, we also calculated the minimum down payment required to secure a mortgage on the median-priced detached house, based on down payment guidelines in Canada.
If the purchase price for a property is lower than $1M, the minimum down payment required ranges between 5% to 7.5% of the purchase price, compared to the minimum down payment of 20% of the purchase price for properties over $1M:
- For a purchase price of $500,000 or less, the minimum down payment is 5%
- For a purchase price of $500,000 to $999,999, the minimum down payment is 5% for the first $500,000 and 10% for the remaining portion
- For a purchase price of $1,000,000 or above, the minimum down payment is 20%
This means buyers purchasing a home under $1M need a substantially smaller down payment relative to property’s total price. For example, for a purchase of $1,000,000, the minimum down payment required is $200,000; however, for a home purchased for $999,999 (a dollar shy of $1,000,000), a buyer needs a minimum down payment of $75,000.
Housing Competition for Detached Properties Heating Up Across Toronto’s Most Affordable Neighbourhoods
Across the City of Toronto’s 35 neighbourhoods, there are just 9 neighbourhoods where the median price for a detached house is under the $1M mark, compared to 2019, when there were 14 such neighbourhoods.
“Now that home has become not just where we live, but for many of us, also where we work, finding a space that can accommodate both, at an affordable price within city limits can be challenging,” said Evelyn Anders, Toronto-based real estate agent and Zoocasa’s director of business development. “However, there remain opportunities for those that have their sights set on purchasing a detached property in the city’s East and West end.”
In fact, Zoocasa’s analysis revealed that of the 9 neighbourhoods where median prices were under $1M in September 2020, 4 are situated in the city’s West End and the remainder are in Toronto’s East End. For homes priced under $1M, buyers in these 9 neighbourhoods have a lot more flexibility when it comes to down payments since the minimum down payment required is significantly lower. Specifically, in all 9 neighbourhoods where the median price remains under $1M, the minimum down payment required remains under $75,000, offering prospective buyers a significantly lower barrier to entry for a detached house, than for homes priced at $1M or higher, where the minimum down payment required would be at least $200,000.
Anders notes that the majority of the homes available under the $1M mark are older, war-time bungalows, and some 2-storey properties in the city’s East End. That being said, they offer a great entrypoint to the detached housing market for buyers that don’t mind living in an older property or those that can afford to make renovations over time.
Toronto’s most affordable neighbourhood for detached houses based on the median home price is W03 (Rockcliffe-Smythe, Keelesdale-Eglinton West), where the median price was $875,000 in September 2020, up from $775,000 in 2019. In W03, home buyers require a minimum down payment of just $62,500 to secure a mortgage on a detached property. According to Anders, this neighbourhood has shown tremendous growth in popularity recently, and its proximity to other trendy neighbourhoods like Bloor West Village and The Junction has fuelled further interest in the area.
As such, there is growing competition among buyers in the area this year compared to 2019, based on a sales-to-new-listings ratio (SNLR) of 51% compared to 30% last year. SNLR is a measure of market competition that compares demand to supply in an area. An SNLR between 40% and 60% implies that there is sufficient supply to meet demand in a region,or that the market is balanced. A buyers’ market exists when the SNLR is under 40% and competition favours buyers because available supply outpaces demand.
It is worth noting however, that as in W03, in nearly every neighbourhood where median price remains under the $1M mark, housing competition conditions have tightened for buyers, and in favour of sellers. For example, in E10, and E11, the SNLR was 72% and 83%, meaning there is much more demand than available supply, resulting in a seller’s market. A seller’s market exists when the SNLR is higher than 60%. In 2019, both E10 and E11 exhibited balanced market conditions – where demand and supply dynamics were better balanced – with an SNLR 41% and 53% respectively.
Of the 5 neighbourhoods where prices grew past the $1M mark since September 2019, 4 neighbourhoods are situated in the East End and 1 neighbourhood is in Toronto’s West End. They are:
- W09 (Willowridge-Martingrove-Richview): $1,190,000 (+28% y-o-y)
- E03 (East York, Danforth Village): $1,161,500 (+21% y-o-y)
- E05 (Steeles, L’Amoreaux, Tam O’Shanter-Sullivan): $1,061,500 (+18% y-o-y)
- E06 (Birchcliff): $1,071,500 (+18% y-o-y) and
- E07 (Milliken, Agincourt North): 1,016,500 (+21% y-o-y)
Our infographic below compares median home prices for detached houses across 35 City of Toronto neighbourhoods, and highlights the minimum down payment required to afford a mortgage. Further below, find a list of the top 5 neighbourhoods where the median home price for detached properties remains under $1M.
Top 5 City of Toronto Neighbourhoods With the Lowest Median Detached House Price
1. W03 (Rockcliffe-Smythe, Keelesdale-Eglinton West)
Median detached price: $875,000 (+13% vs. last year)
Down payment required: $62,500
Market condition in Sept 2020: SNLR 51% (Balanced Market)
Market condition in Sept 2019: SNLR 30% (Buyers’ Market)
2. E09 (Morningside, Woburn, Bendale)
Median detached price: $890,000 (+15% vs. last year)
Down payment required: $64,000
Market condition in Sept 2020: SNLR 51% (Balanced Market)
Market condition in Sept 2019: SNLR 56% (Balanced Market)
3. W10 (Rexdale-Kipling, West Humber-Claireville)
Median detached price: $891,500 (+14% vs. last year)
Down payment required: $64,150
Market condition in Sept 2020: SNLR 52% (Balanced Market)
Market condition in Sept 2019: SNLR 59% (Balanced Market)
4. E04 (Dorset Park, Kennedy Park)
Median price: $918,000 (+15% vs. last year)
Down payment required: $66,800
Market condition in Sept 2020: SNLR 70% (Sellers’ Market)
Market condition in Sept 2019: SNLR 51% (Balanced Market)
5. E10 (West Hill, Centennial Scarborough)
Median price: $967,000 (+15% vs. last year)
Down payment required: $71,700
Market condition in Sept 2020: SNLR 72% (Sellers’ Market)
Market condition in Sept 2019: SNLR 41% (Balanced Market)