Peel Region has been booming in recent years, with infrastructure and new-home development, and high immigration attraction, so today we take a look at its housing affordability.
The housing market always favours buyers with lots of disposable income for a down payment as well as sustainable income to support the mortgage. It’s not good news for Peel buyers in the median income bracket though, because for them purchasing a home remains largely unattainable. However, Brampton is slightly more affordable than Mississauga.
Zoocasa in a recent report examines the housing affordability in the Region of Peel, comparing Brampton and Mississauga as two of the region’s largest cities by population.
Notes on The Study
The home types are condos, townhouse, semi-detached and detached, which have a price range in ascending order, descending order in qualification for mortgage amounts, ascending for down payment required, and therefore ascending for the number of years it takes to save for the down payment.
The home affordability was calculated as the number of years it would take a household to save to pay for their down payment if they set aside 20% of their income to it annually. These statistics are based on households making median income in their city. The down payment was calculated the gap between the mortgage they’d qualify for on their median income, and the price of the home.
Statistics on median income were referenced from Statistics Canada and median housing prices from Toronto Real Estate Boats. Maximum mortgages in Brampton and Mississauga were calculated based on assuming a 3% interest rate, a 25-year amortization/payback rate, 1% of the home’s cost for property taxes, and a $100 heating bill (Condo fees, loans, and other debt obligations were not factored into the calculations).
Median household income in Brampton is 5.1% more than that of Mississauga, (at $87,290, to $83,018) respectively, with home prices at 18.1% less for all types of homes, which enables higher qualifications on mortgages by an average of 10%, taking residents 1.5 times less to save for their down payments.
Brampton condos remain the most affordable homes at a mean price of $413,500. Median household income in Brampton was taken as $87,290. With a maximum qualification on a mortgage for a condo being $403.786, buyers are estimated to take 1.4 years to save for the down payment $25,244. Townhouses and their prices and mortgage qualifications would take 5.6 years, semi-detached 17.6 years, and detached 26.1 years.
This is in comparison with Mississauga, whose condos cost a median $470,000. With their median income at $83,018, maximum qualification for a mortgage on a condo being $372,409, taking them 5.6 years to save for the down payment. Townhouses would take 15.4 years, semi-detached 24.4 years, and detached 42.4 years.
Brampton condos are more than three times more affordable than those in Mississauga, according to the down payments, and 60% more affordable for detached.
Zoocasa recommends some of the best freehold opportunities for first-time buyers that exist in Brampton are: Malton (townhouses and semi-detached), Erindale (semi-detached) and Lakeview (semi-detached), and in Mississauga: Madoc (townhouses and semi-detached), Central Park (detached) and Fletcher’s (townhouses and semi-detached).
For more information, especially tips for first-time buyers, check out Zoocasa’s commentary on the report.