It can take 100 years to save for a down payment on a house in Vancouver

Nov 22 2019, 10:35 am

It’s no secret that the dream of home ownership in Metro Vancouver is a pricey one, and now a new report from Zoocasa has found even saving enough for that ever-important down payment could also be simply a dream for many median-income earners — unless they can live for longer than a century.

In the report, Zoocasa said that based on its findings “there are no municipalities in which a median-income household could afford Metro Vancouver houses for sale without having to save for at least two decades for the necessary down payment.”

And in the region’s three priciest luxury neighbourhoods – including Richmond, Vancouver westside, and West Vancouver – where benchmark home prices range between $1.5 to $2.9 million, “it would actually take more than 100 years to come up with the needed funds.”

To come up with its data, Zoocasa sourced benchmark home prices for both detached houses and apartments in 16 municipalities across Metro Vancouver.

The study then calculated the maximum mortgage amount a median-income household in that city would qualify for if they were purchasing the benchmark home in their region. Then the remaining required down payment, as well as the timeline required to save those funds, assuming households put away 20% of their income each year was calculated.

Zoocasa said mortgage calculations were based on the federal mortgage stress test rate of 5.19% and a 25-year amortization, as well as carrying costs of 1% for property taxes, and $100 monthly for heating bills.

Even in Metro Vancouver municipalities that have long been considered more affordable options, potential buyers earning median income would still have to save for at least two decades to come up with the necessary down payment for a detached house.

For example, in Maple Ridge, North Delta, and Pitt Meadows, where benchmark house prices range between $804,200 to $881,900, homebuyers would need to save between 27 to 32 years to amass the necessary down payment.

Vancouver

Zoocasa

Condos still accessible option

There is still some good news in all this, for those looking for a home, but who aren’t concerned with owning a detached house.

In its report, Zoocasa said there are still “several” Metro Vancouver municipalities that offer affordable entry point housing for median-income earners.

Those looking to purchase condos could hope to do so on a savings timeline of less than five years in North Delta, Maple Ridge, and Port Coquitlam, where the benchmark price ranges from $372,100 to $437,400.

Top 3 most affordable Metro Vancouver municipalities for houses

  • Maple Ridge
    • Benchmark price: $804,200
    • Median income: $86,178
    • Maximum mortgage: $342,736
    •  Down payment required: $461,464
    •  Years to save: 26.8
  • North Delta
    • Benchmark price: $886,800
    • Median income: $92,300
    •  Maximum mortgage: $364,700
    •  Down payment required: $522,100
    •  Years to save: 28.3
  • Pitt Meadows 
    • Benchmark price: $881,900
    • Median income: $86,912
    • Maximum mortgage: $335,833
    • Down payment required: $546,067
    • Years to save: 31.4

Top 3 least affordable Metro Vancouver municipalities for houses

  • Vancouver Westside
    • Benchmark price: $2,912,000
    • Median income: $65,327
    • Maximum mortgage: $66,183
    • Down payment required: $2,845,817
    • Years to save: 217.8
  • West Vancouver
    • Benchmark price: $2,523,300
    • Median income: $89,808
    • Maximum mortgage: $120,854
    • Down payment required: $2,402,446
    • Years to save: 133.8
  • Richmond
    • Benchmark price: $1,501,600
    • Median income: $65,241
    • Maximum mortgage: $129,786
    • Down payment required: $1,371,814
    • Years to save: 105.1