You need to make at least $108,000 a year to buy a home in Canada

chingyunsong/Shutterstock

If you want to buy a home in Canada, you would have to make six figures a year, a new study has found.

Think tank Generation Squeeze has published a report on home price inflation, highlighting the urgent need for Statistics Canada to improve the measure of housing price inflation.

According to their research, it currently takes 17 years of working full time for a young person to save at least 20% of their downpayment. Generation Squeeze notes that this is “12 more years” than when today’s aging population started out as young people aspiring to own a home.

If you live in BC or Ontario, the working period to afford this sort of downpayment is much longer than the national average — around 27 years.

Generation Squeeze | CREA

The report further states that average home prices would need to fall $341,000 – half of the 2021 value – to make it affordable for a typical young person to carry a mortgage that covers 80% of the value of an average-priced home at current interest rates.

That, or you’ll have to make $108,000 a year. That’s double the amount the average Canadian makes during a year.

But depending on which region of Canada you’re in, rising home values could either drive further unaffordability or become a means to generate wealth.

Generation Squeeze | Canadian Tax Foundation

Metro Vancouver in BC takes the number one spot for the most expensive homes on average, with the Greater Toronto Area in Ontario following closely.

Homes in New Brunswick, Newfoundland and Labrador, Saskatchewan, PEI, and Nova Scotia have the lowest average prices, while Quebec and Alberta fall somewhere in the middle.

Though home prices are falling across the nation, soaring interest rates have aspiring homeowners nervous. The Bank of Canada is expected to make an announcement on December 7, and experts fear it’s going to be another interest rate hike — the seventh one this year.

And if you don’t want to buy a home, the renting route isn’t affordable either. Currently, the national average rent for a two-bedroom unit has risen to $14,004 a year.

Generation Squeeze | CMHC

If you’re in BC, Northwest Territories, Ontario, this per-year rent amount is much, much higher, ranging between $17,000 to $22,000.

“In the early stages of the pandemic, the Ontario government presided over the worst erosion of housing affordability witnessed by any Canadian province over a two-year period in the last half-century,” note experts at Generation Squeeze, adding that even BC, the “wild west of real estate” did not see the gap between local earnings and average housing prices grow as fast as it did in Ontario between January 1, 2020, and December 31, 2021.

Quebec is looking pretty good right now with an average yearly rent of $10,000 to $11,000.

What do you think is the best course of action for young Canadians right now, making half of what they need to afford the average 20% downpayment?

You might also like: