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.
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”.
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”.
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.
- Straddling the Gap: pdf
- Blog TO: L O’Neil: Jun 13/19: Toronto home prices triple what millenials can afford
- CBC: R Schmunk: Jun 12/19: Vancouver prices quadruple what millenials can afford
- CTV; J Forani: Jun 12/19: Home prices-“troubling” affordability (+video)
- Financial Post: N Powell: Jun 7/18: Millenial housing crisis? Worse than what you thought
- Vice: D Brown: Oct 29/18: Canada has broken housing system