Toronto’s runaway house prices could threaten the city’s economy if even the wealthiest one per cent of earners find themselves priced out of the market, as is now happening, the Bank of Montreal’s economics branch is warning.

BMO chief economist Douglas Porter crunched the numbers and found that someone earning $225,000 a year — right at the cutoff line for being in the one per cent — would not be able to afford to buy an average-priced single-family home in Toronto.

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That’s despite the fact this earner would be considered rich under tax rules. Anyone in Ontario earning above $220,000 pays a combined top marginal tax rate of 53.53 per cent.

Taking into account the "stress test" for mortgages that the federal Liberals instituted last year, Porter estimated that a couple earning $225,000 with $100,000 for a down payment would be able to afford a house of $987,289. The average price of a single-family home sold in Toronto in February was $1.57 million.