Owning a home in Canada has become an impossible dream for many due to high house prices. But now a recent report demonstrates how harsh that reality truly is.
Generation Squeeze, an advocacy group for young Canadians, released a report in June to show just how long it will take a millennial to save for a down payment. In Toronto, that number is 21 years, in Vancouver, it’s a whopping 29.
This is staggeringly high compared to the average time it took someone aged 25 to 34 to save back in 1976. At that time, it only took a mere five years for a full-time worker to come up with 20 per cent of their down payment, the report notes.
But Toronto and Vancouver aren’t the only cities where it will take millennials an extended amount of time to save. Housing markets across Canada are getting increasingly tougher. Victoria (17 years), Kelowna (13 years), Kitchener (12 years), and Montreal (11 years) are some cities where affordability is becoming a growing problem as well.
Today, the average Canadian millennial will need at least 13 years to come up with the money for a down payment.
The key issue is that the rise of house prices have outpaced average earnings considerably. According to the report, the salaries of millennials would need to nearly double to $93,400 in order to make housing affordable. Or, on the flip side, house prices would need to drop by $233,000, which is nearly half.
These findings are similar to a previous study conducted by Zoocasa. It found that only 10 per cent of Toronto’s top earners and 2.5 per cent of Vancouver’s top earners could afford a home in their prospective cities.
“This illustrates just how elite a level of income you need to purchase a benchmark home in these cities,” said Penelope Graham, Zoocasa’s managing editor. “It really highlights that house prices have not kept pace with incomes in these cities.”
Paul Kershaw, the lead author of the Generation Squeeze report, is now calling on politicians to take action.
“This struggle underscores the need for decision-makers at all levels of government to prioritize action on housing affordability and the enduring challenges facing younger – and many other – Canadians,” he wrote.
The federal government is trying to address affordability issues in Canada’s housing markets. In addition to their 10-year, $40-billion national housing strategy, they will launch their First-Time Home Buyers Incentive on September 2.
Additionally, the Canada Mortgage and Housing Corporation plans to make all homes affordable for Canadians by 2030. The corporation said they will look to governments and the economy to make this happen.