Yahoo Finance Rent going up twice as fast as incomes in Toronto
Toronto welcomed 77,000 newcomers last year — almost as much as the four fastest-growing U.S. cities combined.
A new report from the Toronto Foundation shows not everyone is benefiting from the city’s economic growth, especially when you consider sky-high housing costs.
“Between 2011 and 2016, the city’s GDP grew by 3.2 per cent annually, almost twice the national pace (1.8 per cent),” reads the report.
“The unemployment rate has hit a low not seen since 1990, declining from 10.4 per cent in September 2014 to 6.1 per cent by June 2019. Toronto is on a roll.”
But the report found inflation-adjusted incomes for newcomers, young people, and visible minorities haven’t budged since 1980. Meanwhile, older, White, and Canadian-born residents have enjoyed a 60 per cent bump.
Despite a steady reduction in the overall poverty rate, it remains high relative to other cities, and wage gaps are a persistent problem.
“Toronto has the most income inequality in the country, leading to bigger wealth disparities: net worth increased by $2,100 for the bottom 20 per cent between 1999 and 2016 versus more than $600,000 for the top 20,” reads the report.
“Toronto is the most expensive major city in the country in which to live, and critical costs that are disproportionately born by those in low income, including newcomers, youth, and racialized populations, are growing much faster than overall inflation, such as rent, transit, child care, and tuition.”
The biggest cost is housing, which is increasingly unaffordable, in part because supply hasn’t kept up with the demands of a growing population.
The report found home prices grew four times faster than incomes, while rent rose twice as fast.
It also found the wait list for social housing is up 68 per cent over the last 12 years, and no new units have been built in decades.
The shelter system is near 100 per cent, and homelessness has gone up 69 per cent in five years.
Findings to be reviewed by city staff
“As the report notes, Toronto has seen exponential growth over the last few years which continues to attract people from all over the world,” Mayor John Tory’s office told Yahoo Finance Canada.
“With that growth comes challenges that the mayor and city council are committed to addressing.”
Paul Kershaw, Generation Squeeze founder and UBC professor, says his organization’s research confirms the report’s findings.
“There is now a massive gap in Toronto between local earnings and average home prices, which is hitting younger residents particularly hard,” Kershaw told Yahoo Finance Canada.
“Whereas it used to take six years of full-time work for a typical young person to save a 20 per cent down payment on an average home, it now takes 21 years in the GTA.”
Generation Squeeze has a voter’s guide to help Canadians make sense of federal party promises on affordability.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.
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