This Is How Long You Need To Save For A Down Payment On A Home In Canada & Yikes, It's Bad
It's more than two decades in some provinces. 😬
If you're looking to buy a home in Canada, new research about how long it takes to save for a down payment may be a bit disheartening.
Generation Squeeze has released a report shedding light on how many years of full-time work a typical young Canadian would need to afford a 20% down payment on a home, and the numbers are probably as bad as you think.
The "charitable think and change tank," which promotes generational fairness, has released its "Straddling the Gap" report for 2022, which analyzed the gap between average home prices and the earnings of typical young people in Canada.
Nationally, according to the report, it takes 17 years for residents aged 25 to 34 to save a 20% down payment for a home.
The report noted that this is a whole 12 years longer than when the aging population of today was young.
It also showed that while this number has increased along with the average home prices in Canada since 1976, the typical earnings for a 25 to 34-year-old in the country have remained almost stagnant at about $50,000 a year.
Generation Squeeze said that average home prices would need to fall by $341,000 to make it affordable for a typical young person to carry a mortgage covering 80% of the value of an average priced home at today's interest rates.
Alternatively, full-time earnings for this age group would need to increase to $108,000 a year, which is 100% more than current levels.
How long does it take to save for a house in Canada?
While nationally it takes 17 years to save for a down payment, this number is a lot different provincially.
In B.C., where average home prices are between $900,000 and $950,000 as of 2021, it takes the typical young person a whopping 22 years to save for a 20% down payment on a home.
In Vancouver, where the average price of a home is upwards of $1,150,000, this number is even higher at 27 years.
Like B.C., in Ontario, the time it takes a young person to save a down payment is also 22 years.
However, in the Greater Toronto Area, where the average home price is about $1,100,000, this number is 27 years.
Here's how long it would take young people to save a 20% down payment for a home in each province:
- B.C. - 22 years
- Ontario - 22 years
- Yukon - 13 years
- Quebec - 11 years
- P.E.I. - 10 years
- Alberta - 9 years
- Nova Scotia - 9 years
- Manitoba - 9 years
- Newfoundland and Labrador - 8 years
- Saskatchewan - 7 years
- New Brunswick - 7 years
- Northwest Territories - 7 years
Nunavut was not accounted for in the study.
Perhaps unsurprisingly, young people in B.C. and Ontario would have to work the highest number of years to save a down payment, likely driven by home prices in Vancouver and Toronto, two of Canada's most expensive markets.
Some relief may, however, be in sight. According to a recent report, these markets, along with others, are set to see house prices fall in 2023.
RE/MAX's Canadian Housing Outlook released on November 29, 2022, predicted a decrease of 3.3% in the average home price across Canada next year.
Specifically, the GTA is expected to see a decrease in home prices of 11.8%, while the Vancouver region is expecting a decrease of 5%.