The study – which looked at wealth trends across the country – found that the average net worth per household within the larger Toronto area had increased by $518 in 2018 – or 0.1% – to $977,698. Average net worth is defined as assets minus debt.
In contrast, the overall average Canadian net worth decreased last year by $7,594, or 1.1%, to $678,792. This marks the first time since the financial crisis of 2008 that the net worth of the average Canadian household has decreased. In 2008, the drop in average net worth was due to a combination of decreasing liquid assets and pensions, along with increasing debt.
However, not all of Toronto is getting wealthier. While those with property in Etobicoke or real estate in Scarborough or East York have seen their household wealth increase by $6,453 – or 0.7% – to $959,946, the rest of the Toronto census metropolitan area (CMA) experienced a decline in household wealth by $6,058 – or 0.6% – to $997,012.
Net Worth & Real Estate in Toronto
According to Environics Analytics Research and Development Senior Vice President, Peter Miron, real estate plays a large part in the recent net worth trends. Toronto real estate prices strengthened while prices elsewhere in the Toronto CMA showed slower growth. For comparison, Vancouver real estate values experienced just the opposite of what happened in Toronto – dropping in the city while increasing in the suburbs.
Despite net worth growth in Toronto increasing more than in surrounding areas, the study shows that those areas remain wealthier on average than the City of Toronto, where homeownership is less common. Nonetheless, the gap between the net worth of the suburbs and the inner city shrank from 2017 to 2018.
Growth in the average household income in the City of Toronto was 3.3%, as compared to 2.9% for the surrounding Toronto areas. Toronto’s real estate value grew by 5.6%, while other communities saw a 0.1% decline; similarly, Toronto households saw a 6.2% increase in total debt, compared to a 1.4% rise in the suburbs.
National Real Estate & Net Worth
Although the nation’s housing market saw increases last year, the late stock market correction – as well as decreased pension plan values and higher levels of debt – counteracted some of the benefits of a strengthened real estate market across the country.
According to the study’s data, the average Canadian home saw an increase of $6,336 in equity, or 1.6%. However, the stock market downturn removed an average of $10,045, and debt levels rose by an average of $3,309, or 2.3%. Pension plans also decreased an average of $576, or 0.4% in the same period.
Ontario came out on top last year as the best-performing province in Canada. Here, the average net worth per household remained relatively unchanged, decreasing by just $62 to $794,916. A slight increase in real estate holdings – along with a preference in the province for safer, non-stock market, liquid assets like traditional bank accounts – helped keep the net worth of Ontario residents fairly steady in 2018.
In British Columbia, household net worth dropped 1.2% to $943,742. Despite the decrease, BC holds the title of wealthiest province in Canada. Here, real estate values grew slower than the national average – increasing by just 0.6% – while household debt increased faster than the national average, going up 2.9%.
In Prince Edward Island, New Brunswick, and Newfoundland and Labrador, the average net worth per household decreased by 0.1%, 0.5%, and 0.7%, respectively. However, Prince Edward Island, New Brunswick, and Newfoundland and Labrador performed second-, third-, and fourth-best out of all the provinces in Canada, respectively. Major factors that contributed to this were the above-average increases in real estate holdings seen in New Brunswick and Prince Edward Island.
In the prairies, Alberta and Saskatchewan experienced the largest decreases in average net worth per household in 2018. In Alberta, households saw their wealth drop by 4.1%, while Saskatchewan households experienced a decrease of 2.9%. In both provinces, decreases in real estate prices were a major factor in the dip in net worth.
Net worth growth among those living in Toronto increased last year, while much of the rest of Canada saw net worth declines. In most cases, cities that have experienced net worth increases – or simply much smaller net worth decreases – have also experienced positive growth in their real estate markets, suggesting that real estate plays a large role in the wealth trends of these cities.