Financially, Torontonians are stretched pretty thin.
And in the wake of Mayor John Tory’s public intentions to increase Toronto’s city building levy, cash-strapped Torontonians are left wondering how they’re going to make ends meet.
“We could agree that $50 per year is a small amount, but is that the only expense that’s changing for people,” said insolvency trustee Doug Hoyes, co-founder of Hoyes, Michalos & Associates Inc.
“Of course, the answer is no.”
On Wednesday, Tory said he’ll ask council to hike the City Building Fund ahead of the 2020 budget to fund both housing and transit costs.
While only costing the average homeowner an extra $43 this year, that amount will climb to nearly $300 when the levy increases to 10.5% by 2025.
“One thing is not going to make a huge difference, but when you add enough ‘things’ together, it becomes the straw the breaks the camel’s back,” Hoyes said.
“People in Toronto don’t have a debt problem so much as they have an income problem.”
Earlier this week, Feed Ontario reported seeing more clients with full or part-time jobs, up 27% over the past three years.
Keeping ahead of increasing costs can be especially challenging, particularly for younger Torontonians, says millennial money expert and financial councillor Jessica Moorhouse.
“Even the people making good money are still living paycheque to paycheque,” she said. “You can only crunch your numbers so much, you can only budget and cut back so much.”
BDO Canada says affordability is tightening its hold as household debt remains at record levels.
In their 2019 Affordability Index, a little over half of Canadians live paycheque-to-paycheque while a quarter describe their debts as “overwhelming.”
The conclusion many come to just to stay afloat, Moorhouse says, is to simply earn more money.
“That’s easier said than done,” she said. “Especially for somebody already working two or three jobs.”
While money collected through the building fund goes towards affordable housing initiatives, many Torontonians are struggling to keep the home they already own.
Mortgages make up roughly half of the debt Canadians currently carry. And with city house prices on the rise, the amount homeowners will pay in taxes will likewise go up.
Property levies aren’t just felt by property owners, Hoyes said — renters also feel the pain when costs are passed on to them.
“The real estate market has been booming, so that drives rental costs up.”
Toronto’s housing prices are expected to increase 6% next year, putting 2019’s average sale prices at $880,841 and forecast to rise to $933,691 next year.
And as household debt rises, naturally so climbs those ultimately unable to pay what they owe.
Ontario’s insolvency rate, Hoyes says, is up an average of 22% over the past three months.
“That was after, between 2010 and 2017 they fell every year — the economy was good, everything was going good — but our debt has just caught up to us now, and more importantly the cost of servicing that debt,” he said.
“We just don’t have the ability to service the debt anymore,” Hoyes added.
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