Many young people are finding the dream of owning their own home is simply out of reach, especially in most of Canada's major urban centres (iStock-Getty)

Young Canadians priced out of home buying


A new report basically confirms what a lot of young Canadians already know. They can’t afford to buy a home.

The report by Sutton Eaves and Dr. Paul Kershaw of UBC’s School of Population and Public Health shows that house prices are far out of reach for most millenials –aged between 25-34-  and remain at record high levels, while salary levels for many years have been flat or even declining.

Showing how overheated the Vancouver market is, this property on West 3rd Ave in Vancouver described as a “fixer-upper” was listed in Aug of 2018 at $3.9 million, obviously that’s just for the location. (Promerita Realty Corp)

The report, Straddling the Gap: A troubling portrait of home prices, earnings and affordability for younger Canadians, notes that in terms of affordability for young Canadians, and on a country-wide basis, “ Average home prices would need to fall $223,000 to achieve affordability by 2030 – about half of the current value; or typical full-time earnings would need to increase to $93,400/year – nearly double current levels”.

This is another thing people are finding when bidding for a house in overheated markets, Young people who do manage to buy a house often find they have to work two or more jobs to pay for out while skimping on many other things. (Mike Cassese-Reuters)

It then specifics the differences in  affordability for various centres in Canada. In the hot market of Vancouver, British Columbia for example, Average home prices would need to fall $795,000 – about three-quarters of the current value; or typical full-time earnings would need to increase to $200,400/year – quadruple current levels.

In the medium sized Ontario city of Kitchener, “Average home prices would need to fall $206,000 – nearly half of the current value; or

typical full-time earnings would need to increase to $92,400/year – 75% more than current levels”.

This small home in Ottawa’s Little Italy neighbourhood sold for $845,000 in April — $195,000 above the owner’s asking price. in April of 2018 (Elyse Skura/CBC)

Just to achieve the savings necessary for the 20 per cent down payment can take millenials at least 13 years to meet the payment on the national average, and that is being made even more difficult as rents rise substantially in the meantime.

The report notes that the average house cost to income ratio was about 4-1 some 40 years ago, but now its more like 10-1, and in the hot markets of Toronto and Vancouver, it rises to 12-1 and to 14-1.

The report notes it is possible for millenials to buy homes in Saskatchewan, Manitoba and Nova Scotia, where only 10 per cent of the whole population lives, but even then, that’s only if interest rates remain at their current low levels.

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