2 weeks Ago By Nathan Griffiths
Article content The average first-time in Vancouver needs 13 1/2 years to save enough for a 10 per cent down payment, according to a new report from financial news site . That’s the longest home deposit savings time of any major Canadian city. Toronto was a close second, at 13 years and two months.
“Although Vancouver and Toronto are appealing, each homebuyer must weigh the cost versus savings when buying in these expensive cities,” said Kris Bruynson, a vice-president at Money.ca. “Is it worth spending 13 years saving up a down payment just to get on the property ladder in an expensive city?” The Lower Mainland didn’t fare much better, with the third longest savings time.
Researchers estimated it would take 12 years and 10 months to save enough for a down payment for the average home price in the area. Researchers used data on the average home price in each city from the to estimate the time needed to save for a 10 per cent deposit. They assumed homebuyers earning the median income in each city were able to save 20 per cent of their monthly income to put toward a down payment.
Kyle Green, owner of Vancouver-based , questioned some of the report’s assumptions. “Why would somebody save up 10 per cent if they can do as little as five per cent?” he asked. Properties under $500,000 only need a five per cent down payment.
Green said most first-time buyers in the Lower Mainland are looking at entry-level condos that fall under that threshold and many get support from family. “Almost every one of my clients is getting help,” he said, noting that most first-time homebuyers in Vancouver get help from parents or grandparents, often to the tune of $100,000 or more. Rebecca Casey, president of the , agreed, saying the typical profile of first-time homebuyers in the Lower Mainland is two people with well-paying jobs coming together with a “six-figure” family gift and the joint income to support the mortgage.
“Somebody making $45,000 a year who’s living in a rental, like a basement suite or an apartment or something like that, most of their income is going to housing,” Casey said. “There’s no margin for them to be saving, especially in this heightened period of inflation. “The people that I’m seeing are from a much, much higher income, and even they are struggling to save up the down payment,” she said.
Both Casey and Green said they have seen a jump in the use of reverse mortgages in recent years, as parents and grandparents look for ways to capitalize on the existing equity of their homes without having to sell. They also pointed to a number of changes announced by the Canadian Mortgage and Housing Corp. that are intended to ease access to housing, including alterations to commercial mortgage rules intended to encourage purpose-built rentals and reducing down payments to $125,000 from $300,000 for properties up to $1.
5 million. “(CMHC) indicated that this change gets buyers into the market 11 years earlier,” Casey said..
