Yahoo Finance It takes the average household 52 years to save up for a home in Vancouver
Canada’s political parties are making all kinds of promises to help make homeownership in the country’s biggest cities a reality, but it’ll be an uphill battle for whoever wins the federal election.
A new study from Zoocasa illustrates just how out of control the situation has become for the average Canadian — especially in Greater Vancouver.
The maximum mortgage a household earning the median income of $72,662 would qualify for is $241,994. That assumes a 3 per cent mortgage rate, plus one per cent in property taxes and $100/month for heating.
Considering the average price of a home in the area is $993,300, the buyer has to come up with $751,306 on their own. If the household saves 20 per cent of their income per year, it would take 52 years to come up with what would amount to a 76 per cent down payment.
Looking outside of the city limits won’t help much. The maximum mortgage a median income household ($69,289) qualifies for is $247,404 in Fraser Valley, leaving the buyer $575,896 short. It would take 42 years to save up enough for a 70 per cent down payment.
Saskatchewan’s two biggest cities fall on the opposite end of the spectrum. Regina is the most affordable of the 15 major urban centres included in the study because the median household earning $84,447 would qualify for a $264,685 mortgage. Since the average home price is $267,900, it would leave the buyer on the hook for only $13,395 and a five per cent down payment — a relatively manageable target that would take a year to save up for.
It would also take a year in Saskatoon (the median income being $82,999) to come up with the $14,540 remaining, the 5 per cent down payment needed after being approved for a $287,310 mortgage.
“Our findings reveal that, while incomes and home prices are generally aligned in the Prairie and Albertan markets, this isn’t the case in major B.C. and Ontario urban centres like Greater Vancouver and Greater Toronto,” Penelope Graham, managing editor at Zoocasa, told Yahoo Finance Canada.
“The numbers reveal there’s a large disparity between what a median-income household could afford, and what is considered a benchmark home, and that there aren’t many realistic options for such a buyer, even if they dedicated significant portions of their income to saving up for their home purchase.”
If re-elected, the Liberals promise to pump up the First-Time Home Buyer Incentive.
The conservatives want to bring back 30-year mortgages and ease the mortgage stress test.
The NDP wants to crack down on money laundering, and foreign speculators — which would be on top of the levy already in place in parts of B.C.
“There isn’t one silver bullet when it comes to solving housing affordability, as there are a number of factors that contribute to expensive home prices, such as supply, investment, wage growth, and population growth,” said Graham.
“It’s encouraging that the highest levels of government are making housing affordability a priority and are starting to examine policies aimed at addressing these factors.”
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.
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