Housing affordability has been tightening for most of 2023, but it’s not just homebuyers who have been affected by rising costs. Renters, too, are grappling with higher rents and stronger competition, especially as homeownership affordability erodes and would-be buyers move into the rental segment. Rentals.ca reported in August that the national asking rent was at a record high of $2,117, and the Toronto Regional Real Estate Board (TRREB) reported that the average one-bedroom condo apartment rent in Q2 2023 was $2,532 – an 11.6% increase from Q2 2022.
As renting becomes less affordable, many renters might be wondering how condo homeownership compares. In fact, in several Toronto neighbourhoods renters would be able to save for a condo down payment in less than a year, making condos an attractive option for first-time homebuyers.
Enjoying our content? Subscribe to our free weekly newsletter to get real estate market insights, news, and reports straight to your inbox.
To find out how rent costs compare to those of homeownership, Zoocasa compared average condo apartment lease rates with sold prices for condos in 35 neighbourhoods within Toronto. We then calculated the minimum down payment in each neighbourhood and found how many months of rent the minimum down payment is equal to. For the purpose of this study, the number of months of rent needed for the minimum down payment was determined by assuming the renter does not pay rent during this time.
The Time it Takes to Save for a Condo Down Payment Decreased in 9 Neighbourhoods
The last time we conducted this study was in March 2023, using Q4 2022 data, and since then several neighbourhoods have become more affordable, either because the average condo apartment sold price decreased or the average condo lease rate per month increased since the end of 2022.
In the neighbourhood where it would take the least amount of time to save for a condo down payment, West Hill, Centennial Scarborough, the months of rent the minimum down payment is equal to decreased from 10.1 months in Q4 2022 to 9.5 months in Q2 2023. The last time we analyzed this data, there weren’t any neighbourhoods where it took less than 10 months to save for a condo down payment, however, previously there were 8 neighbourhoods where it would take less than 12 months to save for a condo down payment and now there are only 5.
Other neighbourhoods where it will take less time to save for a condo down payment now than in Q4 2022 include Willowridge-Martingrove-Richview, Islington-City Centre West, Eringate-Centennial-West Deane, East York, Danforth Village, and Leslieville, Riverside, Little India. These pockets of affordability can generally be found to the east and west of the city centre.
The neighbourhood with the largest drop in the time it takes to save for a condo down payment is Bedford Park-Nortown, Lawrence Park, Forest Hill North. In Q4 2022, it would take a renter 90.8 months to save the $247,212 needed for a condo down payment, but in Q2 2023 it would take a renter 73.7 months to save the $220,894 needed for a condo down payment.
Majority of Neighbourhoods Require 16+ Months of Rent to Save for the Minimum Down Payment
For the City of Toronto as a whole, it would take the average renter 17.9 months to come up with the $51,983 down payment necessary to purchase the average condo apartment priced at $769,832. Not only has the average price of a condo in the city increased in the last two quarters, but the average condo lease rate has also increased by over $100.
The most expensive neighbourhoods are all in the city centre, though the Downtown, Entertainment District, CityPlace, Liberty Village neighbourhood is not as expensive as other city centre areas. The average renter would need 19.2 months of rent to afford the minimum down payment of $58,090, which, compared to the most expensive neighbourhoods on the list, Rosedale, Moore Park, and York Mills, Bridle Path, Hoggs Hollow, is drastically cheaper.
In York Mills, Bridle Path, Hoggs Hollow, it would take the average renter 93.3 months to save for the minimum down payment of $314,554. However, it’s Rosedale, Moore Park that has the most expensive average condo apartment price – it would take the average renter 92.5 months to come up with the $344,000 required to purchase the average condo apartment priced at $1,720,002.
Want to find a condo in your area? Give us a call! Our experienced real estate agents can answer any questions you have about the homebuying process and can give you market insights tailored to your local area.
