Toronto considers helping higher earners with a down payment initiative
The City of Toronto is proposing to loosen its affordable home ownership rules to offer assistance to higher-income households — as city hall has repeatedly fallen short of its own targets for getting families into lower-cost homes.
Though the city has aimed to help 400 low-to-mid-income households a year gain a foothold into home ownership since 2015 — a target several non-profits have suggested is “relatively modest” — a new city hall report acknowledges that target “typically” hasn’t been met. In 2022, for example, city hall approved 151 affordable ownership units, their data shows.
City staff blame a series of roadblocks in their report, including a smaller number of builders interested in building affordable owned units, limited funds available at city hall and from higher governments, and increased borrowing and construction costs that have raised the overall price-tag of new homes.
Toronto’s assistance program today promises to waive fees charged to groups such as Habitat for Humanity and Options for Homes, with the idea the savings be passed on as down payment assistance loans. Those non-profits also rely on federal and provincial programs to offer more down payment help to buyers.
The province recently mandated that all cities provide these kinds of fee waivers to non-profits. Given Toronto was also facing an uptake problem, city staff saw it as a chance to try to offer more aid.
City hall is now proposing several adjustments to their approach. Along with additional fee waivers and new options for non-profits to partner with private developers to build affordable owned homes, the city is proposing to assist households earning up to $160,000 per year, or those in the 80th percentile of earnings. Previously, the program capped eligible incomes at the 60th percentile, around $102,000 per year.
“We’re experiencing a deepened crisis in our city, where middle-income earners can’t afford housing as well,” city hall housing development director Noah Slater said in an interview. “The program had to go through some changes.”
One challenge has been the swift deterioration of home affordability, with a widening gulf between what the market demands and what households can actually afford.
Slater pointed to a condo in Toronto selling for around $750,000. For a family at the 80th percentile of earnings, they might be within tens of thousands of dollars of being able to buy their own home, versus the hundreds of thousands of dollars a family within the 60th percentile of earnings would need.
The city considers home ownership affordable when housing bills eat up no more than 30 per cent of a household’s earnings. For example, this year, a three-bedroom purchased home would need to cost $320,556 or less to count as affordable to someone in that 60th income percentile, city hall says.
Daniel Ger, CEO of affordable home ownership provider Options for Homes, welcomed the proposal, noting one key challenge they’ve faced in recent years is that midincome households earning around $90,000 a year or less were simply unable to pass a mortgage stress test, even with down payment help.
“The program called for incomes that would be great to be able to serve, but external factors made it really hard,” Ger said.
If approved, the aid offered to higher income earners would be formally counted as “attainable” rather than “affordable” ownership housing. Focusing on that kind of housing was a requirement of the sweeping deal struck between Mayor Olivia Chow and Premier Doug Ford last year that saw the province assume responsibility for the Gardiner Expressway and the Don Valley Parkway.
But even with the proposed changes, Slater said Toronto won’t likely see “substantial gains” on its home ownership assistance goals unless Ottawa and Queen’s Park also offer more down payment support.
Along with the city proposal, staff released an analysis of their current approach conducted by Beam Group and BGM Strategy Group. While highlighting strengths like the 1,242 households assisted from 2009 to 2023, their assessment also flagged problems like restrictive eligibility criteria.
In Alexandra Park, the Star recently reported on an affordable home ownership program aimed at tenants of the area’s subsidized and co-op housing. Run by Habitat for Humanity, that program struggled this year to find takers, which some tenants blamed on eligibility rules. While the average income in 2023 among Toronto’s subsidized housing tenants was roughly $19,200, the income required to qualify for these units was $63,000 per year.
City staff, by adjusting its overall affordable home ownership rules, hope to have an easier path toward Toronto’s overall goal of approving 4,000 affordable owned homes by 2030.
The proposed changes will be considered by Toronto’s planning and housing committee on Thursday. If approved, it will go before council this month.
This article was first reported the Star
