Hereās how long it takes young Canadians to save for a down payment in 20 cities
A new report on the path to homeownership for Canadian renters paints a stark picture of just how long they’ll have to save to afford a place of their own.
Point2 Homes broke down the time needed to save for a down payment in the 20 largest Canadian cities and the findings will definitely put a damper on the homeownership dreams, specifically for younger Canadians.
Long road to homeownership for Gen Z Canadians
The report notes that Gen Z and millennial renters are most motivated to become homeowners, but with the national starter home price at $350,000, a 20% down payment would cost around $70,000.
According to Point2 Homes’ data, Gen Z Canadians (15-25) have it the hardest when trying to save up for a down payment because of their lower incomes.
Based on its city breakdown, the report shows it will take over four decades to save for a home in Markham, Ontario.
The average individual income in that city is $16,603, and with the average starter home price at $667,250, a 20% down payment will be around $133,450.
Saving for a place in Vaughan, Ontario, will also take quite a long time (36.5 years), followed by Vancouver (32.7 years).
Winnipeg (9.3 years), Edmonton (8.9 years), and Quebec City (7.8 years) are cities where it’s significantly easier to save up for a home.
As Point2 Homes data progresses to focus on older age groups, the time needed for saving for a down payment decreases due to a boost in individual income.
For instance, young millennials (25-34) will only need to save for 15 years to put a down payment on a home in Markham, and 13.8 years of saving is required to buy a place in Vaughan.
Older millennials (35-44) will need 11.9 years of savings to purchase a home in Markham and less than 10 years to put a down payment on homes in several other large cities, including Vaughan, Vancouver, Brampton, and Toronto.
Struggling with down payment savings
Point2 Homes says that the youngest (Gen Z) and oldest (baby boomers) Canadians are the groups most keen on purchasing a home before the end of the year.
It’s also the hardest for them to do so because they have the lowest incomes, according to the report’s data analysis.
The report found that while 62% of survey respondents want to buy a home in the next year, many are unprepared to do so, as over half only have $10,000 saved up for a down payment.
Canadians are also struggling to save enough. A poll found that four in 10 respondents said they've managed to put away less than 10% of their monthly income towards a down payment.
Point2 Homes adds that many potential homebuyers don't have a good grasp on the amount of down payment required for a property in Canada.
The benchmark home price is near $700,000 in Canada, meaning a 20% down payment costs $140,000. For starter homes, the down payment amount is usually half this amount ($70,000).
However, survey results showed that a whopping 66% of respondents expected the down payment to be less than $50,000, demonstrating how many Canadians are unaware of how much they'll need to save.