How the dream of the single-family starter home vanished
When she and her husband moved here in 2002, Liz Scanlon immediately wanted to break into Toronto's real estate market.
At 28 years old, she'd been renting in Ottawa after finishing school. But when they decided to put down roots in Scanlon's hometown, buying a house was top of mind.
So it wasn't an unreasonable goal, with a combined salary from her work in non-profits and his as an early-career lawyer.
The couple toured 10 or 15 starter homes" within their budget of $275,000 and found a modest 1930s yellow-brick semi just north of Danforth Avenue near Coxwell Avenue. It had three tiny bedrooms, an unfinished basement, stained glass and an old claw-foot tub. They clinched it under budget for $250,000. It felt like a big, but manageable, debt.
For decades, a starter home was a place that the average working family could attain - usually on the lower end of the housing spectrum, but often ripe for a little elbow grease to maintain or lift its value. In the postwar period, homebuilders happily and profitably catered to this market, with thousands of modest single-family homes built in new subdivisions.
It was the ideal of a detached house with a yard, a first step on the property ladder until the owner could afford something bigger and better.
That notion has become increasingly scarce in the Greater Toronto Area as incomes and home prices became uncoupled around the year 2000. Ontario home prices are now about 22.5 times the average disposable income, up from 12.1 times in 2010, according to a 2021 report by Mortgage Professionals Canada.
In November, a Vancouver think tank that advocates for generational equity reported that it takes 27 years for an average young person to save 20 per cent for the down payment on a GTA home. It took baby boomers about six years, said Generation Squeeze.
That dream of owning a starter home as a single-family home is no longer there. The percentage of people thinking they can actually even get into the market is declining over the years," said Prentiss Dantzler, an assistant professor of sociology at the University of Toronto School of Cities.
In Toronto, many developers are now focused on building vertically. Condos are marketed to investors as rentals, not just to end-user" buyers.
Legacy single-family homes have become prized commodities, with astronomical price tags. In the current real estate downturn, a detached house in the region still sells for nearly $1.4 million on average.
Today's starter home" is more likely to be a condo or a townhouse in a 905-area community, and even that can be out of reach. A one-bedroom condo is the kind of icon of a starter home these days," added Dantzler.
As for the single-family homes that are being built in the GTA now, they cater to a different market. In 2005, the benchmark price for newly built homes was under $400,000. Last month, it was over $1.7 million, according to the Building Industry and Land Development Association (BILD). Even condos are $1.1 million, compared to under $300,000 in 2005.
David Wilkes, the president and CEO of BILD, said this is because land is more scarce, and therefore more expensive, and municipal taxes also add costs. Condos use land more efficiently. There's tremendous demand in the GTA for housing, restricted supply of land, and the land costs as a result are being driven northward," he said.
When John Pasalis, president of the real estate brokerage Realosophy, bought his first home around 2000 - a detached house in East York that cost about $300,000 - condos were already a more affordable option. But for about 20 per cent more you could buy a house.
It sounds like a lot, but if you think about it in today's context, you can't get a lowrise house for 20 per cent more," he said.
Today the difference between a resale condo and a detached house in the GTA is more like 63 per cent, according to the Toronto Regional Real Estate Board (TRREB).
Nowhere in the GTA is a detached house a feasible starter home" anymore, said Pasalis, who considers that to be anything under $1 million.
So where have the starter homes gone? To trace this rapid decline of the home ownership dream, the Star looked at what constitutes a starter home today and how expectations for first-time homebuyers have dramatically shifted in the last 20 years.
We picked three houses in three Toronto-area communities, comparing what a buyer could get in Toronto, Markham and Hamilton in the years 2000, 2010 and 2021 for about 20 per cent less than average selling price in each of those communities. The search was based on the assumption that a first-time or starter" buyer would likely be looking for a property on the lower end of the price scale.
In all three areas, the dream of a single-family starter home went from easily attainable to virtually impossible to find. If I was 28 now ... we wouldn't have been able to afford that house we bought - and I wouldn't be able to leverage that house into the house we have now," said Scanlon, about the larger semi her family bought in 2009. I think it's a generational disadvantage we don't necessarily think about."
Time to save for down payment: 8 years
In Danforth Village, near Cosburn and Coxwell avenues, sits a modest bungalow - two bedrooms on the main floor, plus one tucked in the basement, two washrooms and a finished basement with its own entrance. A listing boasted bus access to the nearby subway line, but also space for cars in the double detached garage.
In the year 2000, this was a starter home within the city's bounds. It was attainable at a cost that hovered around 20 per cent below the citywide average, making it attractive to those just looking to break into the market. When it was listed in April of that year, the sellers asked for $199,900. When it sold in early May, they accepted a hair less, with records indicating a final sale price of $195,000.
A 20 per cent down payment at that price point would be $39,000. That year, the census found the median household income within the city of Toronto was $49,345. If that household were saving 10 per cent of its earnings each year, it could afford that payment in less than eight years.
While the Danforth Village home has been renovated in the ensuing decades, it remains part of Toronto's smaller detached home stock - a remnant of the postwar neighbourhoods that offered starter homes across the map. But the area has been changing all the while: another modest bungalow that once sat next door has since been gutted and replaced with a larger two-storey residence.
Toronto in 2010
Time to save for down payment: 12 years
By 2010, the starter home in Toronto had begun to inch further out of reach for the average person, but was still attainable. In the O'Connor-Parkview neighbourhood, near Victoria Park and St. Clair avenues, another brick bungalow hit the market - with the listing labelling it the perfect starter home!!!"
Per the Star's analysis, the detached brick home was representative of the low end of the market - falling around 20 per cent below the average cost paid for properties across the city in that year.
The three-bedroom, two-bathroom home had been upgraded, the listing said - a new roof in 2004, waterproofing in the basement in 2007. It didn't come with a garage, but had space to park two cars, and a shed out back.
The sellers asked for $349,000. In the end, it sold within days at slightly less - the final price was $345,000, meaning a 20 per cent down payment would require the buyers to rustle together $69,000 up front.
In 2010, the median household income in Toronto was $58,381. If that household were saving at the same rate as the household from 2000 - socking away 10 per cent of their earnings - it would take them just shy of 12 years to save up enough for a 20 per cent down payment.
Toronto in 2021
Time to save for down payment: 20+ years
What is Toronto's starter home of this decade? In short, it's further from the core, harder to attain and requires decades' worth of savings.
Looking at properties that fell around 20 per cent below the average cost in 2021, there were still some bungalows in the mix, such as a raised bungalow that hit the market in the Scarborough neighbourhood of Birchcliffe-Cliffside. A property listing describes the house's interiors as well maintained but dated."
It was offered in as-is, where-is condition, meaning the seller wouldn't be making any repairs for the new buyer. Buy to renovate or rebuild," it suggested.
Like so many properties across Toronto last year, it sold for well above its listing price. Four days after records show it was listed for $699,900, it went for nearly $200,000 more, with a sale price of $875,000.
To reach a 20 per cent down payment, an individual or family would be tasked with tucking away a whopping $175,000. The median household income across the city last year was $84,000 - meaning this starter" home would take more than 20 years of savings.
Markham in 2000
Time to save for down payment: 6 years
This detached brick bungalow in the quiet suburban neighbourhood of Raymerville, built in 1981, gets pretty close to the quintessential starter home. Most of the homes in the neighbourhood were built on former farmland in the same decade, with three or four bedrooms and at least one car garage.
The neighbourhood offers the quiet charm of the suburbs while being close to the GO train and Highway 407 for easy access to Toronto.
With two beds, two baths and a fireplace, the bungalow was advertised as a perfect small home with surprisingly large, well-proportioned rooms" and loads of storage." It was listed at just under $200,000.
In May of 2000 the home sold for slightly under asking, at $195,500. A 20 per cent down payment would have amounted to $39,100. At that time, the median household income in Markham was $77,163. It would take less than six years to save up a down payment if a household were saving 10 per cent of its income each year.
Markham in 2010
Time to save for down payment: 9 years
In 2010, it was still possible to get a two-storey, three-bedroom, three-bath detached home in Markham for under $350,000, or around 20 per cent below the average house price that year.
This Milliken Mills home, near Brimley Road and Denison Street, is slightly further from the GO station than the Raymerville bungalow. But it's still only about a 15-minute drive in good traffic, and close to schools, parks and public transit.
Built in 1986, it sold in 2010 for $349,000, slightly over the $346,000 listing price.
There are hardwood floors throughout" as well as a huge backyard," finished basement and garage, according to the listing.
The median household income for Markham in 2010 was $86,022, meaning that it would take less than nine years to save up a 20 per cent down payment for this home ($69,800), if a household were putting away 10 per cent of its income each year.
Markham in 2021
Time to save for down payment: 16+ years
Eleven years later, the more accessible end of the property ladder in Markham had morphed into a two-bedroom townhouse, like this one in Village Green-South Unionville that went for $870,000 in 2021.
Listed at $799,000, the three-story red-brick home went for $71,000 over asking.
The listing boasted Location! Location!" at the convenient crossroads of Kennedy & Hwy 407."
It's a modern home with granite countertops, hardwood floors and three washrooms. Although there's no basement or garage, it was move-in ready.
But it's also an example that shows just how out of reach housing is for many buyers in the region, and how elusive the starter home has become, even in the wider GTA.
According to the 2021 census, the median household income in Markham was $104,000, and a 20 per cent down payment on $870,000 is $174,000. That means that if a household were saving 10 per cent of its income a year, it would take over 16 years to save for a down payment.
Hamilton in 2000
Time to save for down payment: 6 years
Those willing to drive to the Hammer or deal with what was then pretty infrequent GO service could snag a relative bargain here.
This three-bedroom, two-bath bungalow with a large, manicured yard in Hamilton's Greeningdon neighbourhood sold for $153,900 in 2000 - $5,000 below the asking price, and $50,000 below the average cost of a starter home in Toronto.
Built in 1964, the tidy house boasted hardwood floors, a fully finished basement, including a second kitchen, and a detached garage.
The median household income of $47,855 in Hamilton was also lower than Toronto's, but only by $3,490. A 20 per cent down payment would have been $30,780 - an amount that would take just over six years to save for the average household putting aside 10 per cent per year.
Hamilton in 2010
Time to save for down payment: 11 years
In 2010, first-time buyers looking for an urban neighbourhood, but struggling with Toronto prices, could still buy a detached house in Hamilton's Westdale village. Close to the neighbourhood's centre of shops and a pub, this one-and-a-half-storey detached house on a pretty street was listed for $359,000 and marketed as an investment property.
The little house is in walking distance to MacMaster University and was being rented to six students. The home produced $2,400 a month in rental income for a landlord but could just as easily have been purchased as a single-family home.
With hardwood floors, the house was advertised as well kept," with a newer furnace and roof. It sold for $345,000, about $15,000 under the list price.
Hamilton's median household income in 2010 had risen to $60,059, slightly above Toronto. A down payment would have been about $69,000 and taken over 11 years to save for, if a household put away 10 per cent of its income a year.
Hamilton in 2021
Time to save for down payment: 20+ years
By 2021, Hamilton had become an increasingly popular destination for priced-out Toronto homebuyers who had cottoned to pandemic work-from-home norms, more GO service and the city's booming arts scene.
There were fewer bargains to be had and buyers faced the same stiff competition, with bidding wars and bully offers, as those closer to Toronto.
A four-level backsplit on Hamilton Mountain was listed for $749,000. The 1,400-square-foot detached house offered three-plus-two bedrooms, a tidy yard and an attached single-car garage.
It was snapped up within two days for $876,000 - $127,000 above the asking price. A 20 per cent down payment on the home would have been $175,200. It would take more than 20 years for a household with the average income of $86,000 to save for that down payment if they socked away 10 per cent of their income annually.
May Warren is a Toronto-based housing reporter for the Star. Follow her on Twitter: @maywarren11
Tess Kalinowski is a Toronto-based reporter covering real estate for the Star. Follow her on Twitter: @tesskalinowski
Victoria Gibson is a Toronto-based reporter for the Star covering affordable housing. Reach her via email: victoriagibson@thestar.ca