As Toronto grapples with rising living expenses, the very definition of wealth in the city is becoming increasingly complex. While real estate in the city has long been considered a reliable way to build wealth, recent data and expert opinions suggest that owning property alone may not make someone truly financially free.
In January, the average home price across all property types in Toronto was recorded at $1.04 million, according to the Toronto Regional Real Estate Board. Although this represents a dip from the peak price of $1,334,062 reached in February 2022, prior to the Bank of Canada’s aggressive interest rate hikes, the number still reflects an astonishingly high value. Many homeowners who entered the market before 2022 have built significant equity, while others who bought during the peak may find themselves owing more than their homes are currently worth. But does owning a $1 million home really equate to wealth in this context?
What Does It Mean to Be Wealthy in Toronto?
Jim Chuong, a prominent financial educator with a large social media following, makes a key distinction between being a millionaire and being financially independent. “Being a millionaire and financially independent are two separate ideas,” he explains. “You could have a lot of equity in consumer goods like cars or homes, but that doesn’t necessarily mean you’re financially independent.”
According to the Wellesley Institute, the annual cost for a single adult to “thrive” in Toronto now stands at $61,654 after taxes, illustrating the high cost of living. However, in stark contrast, the minimum wage in Ontario remains just $17.20 an hour. On top of this, Mayor Olivia Chow’s 2025 budget introduces a 6.9% property tax hike, adding more financial pressure on residents.
Equity vs. True Wealth
Seasoned mortgage broker Ron Butler of Butler Mortgage suggests that many people in Toronto who own homes worth over $1 million are far from financially free. “A lot of people in Toronto earn $1 million, but just because you have a house worth $1 million doesn’t make you a millionaire,” Butler says. “If you have a $1 million house and owe $900,000 on it, you’re not technically a millionaire.”
The key here, according to Butler, is home equity. Even if your property is worth over $1 million, without the financial capacity to support your lifestyle, you may eventually need to cash out on that equity to maintain your standard of living. “That’s not true financial freedom,” he notes.
RBC has previously referred to the housing correction of 2022 in the Greater Toronto Area (GTA) as “historic,” but recent data suggests the market is stabilizing and could be on the upswing again. The Toronto Regional Real Estate Board forecasts that home sales will increase by 12% this year, with the average selling price reaching $1,147,000.
Income and Investments Matter
While owning a home is one step toward building wealth, it is insufficient on its own for achieving financial independence in Toronto. “The longer your investments cover your consumption, the more free you become,” Chuong explains. Financial freedom, he argues, comes from having income or investments that support your lifestyle, not just owning property.
Chuong estimates that to be comfortable in Toronto, a couple would need an income of about $20,000 a month. While owning a $1 million home without debt might make someone a millionaire on paper, being financially free requires a much more robust financial portfolio.
The Changing Definition of Luxury
James Milonas, a real estate agent and managing director of The Agency real estate brokerage, points out that the definition of “luxury” in Toronto has evolved. Five or ten years ago, a $1 million budget could secure a decent freehold home in areas like Scarborough, Etobicoke, or Leslieville. Today, that budget is more likely to buy a condo, townhouse, or a fixer-upper in the East or West End of the city.
“True luxury,” according to Milonas, begins at around $4 million, with affluent neighborhoods like Summerhill, Rosedale, Forest Hill, and Yorkville housing properties in this range. These areas represent the city’s most prestigious real estate, where the value of homes ranges from $4 million to $6 million.
Affordability and Market Shifts
With housing affordability at historically low levels, particularly for younger buyers, entering the market can feel like an insurmountable challenge. Milonas notes that 70% of the 8,500 properties currently listed in Toronto are condos, reflecting the increasing preference for smaller, more affordable units. Despite the high cost of borrowing, Milonas advises that it may be better to buy in a market with high rates but less competition than to wait for a market shift and risk overpaying.
For those unable to afford a home outright, Milonas suggests renting out a property as a way to get a foot in the door. “If you can afford to buy and rent out that place, it may be a good way to enter the market,” he adds.
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Old Money vs. New Money
A further distinction in Toronto’s wealth landscape is the divide between those with generational wealth (old money) and those who have recently acquired significant assets (new money). Milonas observes that those in the “new money” category often feel the need to project wealth, sometimes overspending on luxury cars, second homes, or private school tuition. During the pandemic, the ease of access to cheap borrowing led to an increase in overleveraging, and these individuals may face difficulties when their mortgages come up for renewal.
The Bottom Line
In Toronto, owning a home worth $1 million may technically make someone a millionaire, but true wealth requires more than just property value. It involves equity, investments, and a steady stream of income. In a city where costs continue to rise, financial freedom is not guaranteed by homeownership alone. Wealth, in Toronto, is not just about how much your property is worth — it’s about how you manage your income, assets, and the pressures of the city’s ever-increasing costs.
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