Ontario millennials need to save for over 20 years for down payment on a home: report
A new report shows house prices need to drop by more than $500,000 for millennials to be able to afford a home in Ontario.
Generation Squeeze, a charitable organization fighting for generational fairness in the country, recently released a 56-page reported called “Straddling the Gap 2022,” which looks at the disparity between home prices and earnings across the country.
The study analyzes what Canada’s “primary goal” should be for home prices by looking at the gap between earnings and average home prices from 1976 until 2021, which was the last year available to procure data from the Canadian Real Estate Association (CREA).
After analyzing CREA’s data and comparing it to Statistics Canada’s data for annual income, the report concludes prices should stall “for many years ahead – or even continue to fall moderately.”
“The number of years of work required to save [for] a 20 [per cent] down payment on average priced homes has grown in alarming ways in many regions,” the report reads.
Across Ontario, average home prices were just shy of $900,000 last year.
Meanwhile, average income of Ontarians between the ages of 25 and 34 years has stayed nearly the same for decades, lingering at an average of roughly $50,000 a year. According to the latest data from StatsCan, the yearly income was $50,800 in 2020.
In order for millennials to buy a home in the province, the report says average home prices need to drop by $530,000, more than 60 per cent of the market value last year, for them to afford a mortgage that covers 80 per cent of the value.
Or, Ontario millennials will need to be earning $137,000 a year, which is roughly $85,000 more than what they are currently making on average.
A graph of Ontario's home prices relative to 25-to-34-year-olds full-time earnings. (Generation Squeeze)
“It takes 22 years of full-time work for the typical young person to save a 20 [per cent] down payment on an average priced home,” the report reads, which they say is 17 years longer than when “today’s aging population” were their age. The report did not clarify what age groups fall under this definition.
The lack of affordability in the Greater Toronto Area (GTA) is even steeper.
Those who have their sights set on owning a home in the GTA will have to save for an average of 27 years to make the same downpayment on an average-priced home. That is 10 years longer compared to the average amount of time across Canada.
Average annual incomes have remained at around $50,000 in the region, with StatsCan revealing 25 to 34-year-olds in the GTA raked in an average of $51,600 in 2020.
Meanwhile, average home prices in the region have soared to $1.1 million.
According to the report, these prices will have to fall by more than $750,000 for this age group to afford a mortgage that covers 80 per cent of the home’s value at current interest rates.
A graph of the GTA's home prices relative to 25-to-34-year-olds full-time earnings. (Generation Squeeze)
“Or typical full-time earnings would need to increase to $172,000/year – more than triple current levels,” the report notes.
Rent is also steep for those who cannot afford to buy, as the report notes it costs $20,148 a year for a two-bedroom apartment in the GTA in 2021.
With how much millennials make a year on average, rent takes up about 40 per cent of their income.
House prices in the GTA, however, are expected to drop slightly next year.
According to Re/Max Canada’s housing market outlook for 2023, prices are expected to fall by nearly 12 per cent to an average of just over $1 million.
CTVNews.ca Top Stories
Indian envoy warns of 'big red line,' days after charges laid in Nijjar case
India's envoy to Canada insists relations between the two countries are positive overall, despite what he describes as 'a lot of noise.'
Stormy Daniels describes meeting Trump during occasionally graphic testimony in hush money trial
With Donald Trump sitting just feet away, Stormy Daniels testified Tuesday at the former president's hush money trial about a sexual encounter the porn actor says they had in 2006 that resulted in her being paid to keep silent during the presidential race 10 years later.
U.S. paused bomb shipment to Israel to signal concerns over Rafah invasion, official says
The U.S. paused a shipment of bombs to Israel last week over concerns that Israel was approaching a decision on launching a full-scale assault on the southern Gaza city of Rafah against the wishes of the U.S.
Former homicide detective explains how police will investigate shooting outside Drake's Bridle Path mansion
Footage from dozens of security cameras in the area of Drake’s Bridle Path mansion could be the key to identifying the suspect responsible for shooting and seriously injuring a security guard outside the rapper’s sprawling home early Tuesday morning, a former Toronto homicide detective says.
Northern Ont. woman makes 'eggstraordinary' find
A chicken farmer near Mattawa made an 'eggstraordinary' find Friday morning when she discovered one of her hens laid an egg close to three times the size of an average large chicken egg.
Susan Buckner, who played spirited cheerleader Patty Simcox in 'Grease,' dead at 72
Susan Buckner, best known for playing peppy Rydell High School cheerleader Patty Simcox in the 1978 classic movie musical 'Grease,' has died. She was 72.
Jeremy Skibicki has 'uphill battle' to prove he's not criminally responsible in Winnipeg killings: legal analysts
Accused killer Jeremy Skibicki could have a challenging time convincing a judge that he is not criminally responsible for the deaths of four Indigenous women, a legal analyst says.
Bye-bye bag fee: Calgary repeals single-use bylaw
A Calgary bylaw requiring businesses to charge a minimum bag fee and only provide single-use items when requested has officially been tossed.
Alcohol believed to be a factor in boating incident after 2 men die: N.S. RCMP
Two Nova Scotia men are dead after a boat they were travelling in sank in the Annapolis River in Granville Centre, N.S., on Monday.