Toronto’s new wealth gap is driven by real estate, not income — where those who got in early can live a very different life

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Toronto’s new wealth gap is driven by real estate, not income — where those who got in early can live a very different life
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Whether you live comfortably or scrape by increasingly depends on if and when you entered the housing market — leading to a growing divide experts say is threatening the fabric of the city.

When Giulio and Antonia Cescato bought a brand-new, modestly sized condo-townhouse in downtown Toronto in January 2015 they paid just under $600,000.

“Even if the bank was to give us a mortgage, it doesn’t seem sustainable in our minds to take on that much debt,” Giulio, 42, said. It also impacts the biggest life decisions, says University of British Columbia professor Paul Kershaw — whether to move out of your parents’ home; live with a partner; have children.

“Maybe not 10 years ago, but 15 years ago, if you grew up in Toronto and you were fortunate to get a good education and get a good job, you could buy a house and you could live in a neighbourhood either where you grew up or in another neighbourhood of your choice,” says University of Toronto professor Matti Siemiatycki.

“If young families and workers can no longer afford to live in Toronto or people feel precarious in their place here, the city risks losing the work and dynamism they contribute,” he said. New census data won’t be available until summer, but the most recent statistics suggest home ownership is down among younger people. The 2016 Census showed half of millennials owned a home at age 30, compared to 55 per cent of baby boomers who owned at that age.

The couple were only able to purchase because of a gift of $250,000 from Kumra’s parents. That reduced their mortgage to around $805,000, which still means $3,000 a month in payments. “There’s no amount of hard work or pulling yourself up by your bootstraps that is going to help most people ,” added Prisciak. “If you don’t have some kind of wealth from family, I don’t think buying a house in Toronto is an option.”“We’ve created an economy where full-time work in a reasonable period of time cannot secure housing. I don’t even mean home ownership — even access to a rental with enough bedrooms to have a family,” he said.

For economist DT Cochrane, the Toronto region’s housing crisis isn’t a sudden, isolated problem — it is a symptom of an issue that has been brewing for years. If we ignore those issues, the wealth gap will only widen as people increasingly view housing as their retirement nest egg or an asset for a corporation.“Owning a house becomes an important source of leverage to then buy another house and another house. To go from owning one house to two houses is much easier than to go from owning zero houses to even one house.”

If more workers had union protection, stronger pensions and higher wages, people would be less reliant on rising home values for their financial futures, added Cochrane. “If the market is just left to run wild, those communities have often had a very hard time buying in.” Meantime, says Kershaw, Canada’s aging population, which had better pensions, has the lowest rate of poverty and low income of any age group in the country.

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