A new study looking at how long individuals would have to save to afford the downpayment for a starter home in their community found that Vancouver residents face one of the toughest battles in the country.
Point2 Homes’ data suggests that, on average, Vancouver residents need to save for nearly 33 years to afford a starter home.
“Home prices are always going up, which means that, to many renters, buying a home feels like chasing a moving target,” the report said.
Point2 Homes designated starter homes as those costing half or less of the benchmark home price in the region. For Vancouver, that’s a home costing just under $650,000.
For the purposes of the study, the researchers assumed folks would be putting up a 20% downpayment. For a Vancouver starter home, that was just under $130,000. The calculations also assumed renters would save 20% of their annual income toward their downpayment and used average income data from Statistics Canada.
“Despite their determination and will, many renters across Canada could be looking at a much longer saving period than they’d like, especially if they can’t count on financial help from family.”
Even Metro Vancouver suburbs have long saving timelines for buying a home. Starter homes in Surrey are closer to $500,000, requiring just over $100,000 for a 20% downpayment. That would still take the average renter 24 years to save for.
Many BC renters are keen to buy, but the odds appear stacked against them. The study labelled millennial renters as very attuned to the “very real, very substantial requirements of homebuying” as that generation reaches the age where home ownership is tied to other life milestones, such as having children.
“Millennials are acutely aware of the high home prices, the prohibitive down payment amounts and the mortgage rates, which makes them hesitate and pushes them to the sidelines.”
Gen Z potential homebuyers are very determined, with seven out of 10 surveyed indicating they want to buy a home by the end of the year. But determination and financial capability don’t always go hand in hand. Point2 Homes found Gen Z had the lowest income of the generations surveyed besides retired Baby Boomers.
“Unfortunately, they’re looking at the longest saving time frames.”