Canada has seen a surge in property appreciation over recent years, especially in the Vancouver and Toronto areas. The increase in property value has made the dream of homeownership nearly insurmountable for younger generations. With today’s property values, many millennials are unable to afford a home in the way that older generations were: this long-stated anecdote is now being confirmed by new reports which compare the average pricing of houses around Canada to the average income for people in the millennial generation. The report finds that housing is not just difficult to obtain for millennials, but that housing affordability itself is out of reach.
As of 2018, a study showed that the average price of a home sold in Vancouver is about 4 times higher than what the average millennial buyer can afford. This example was repeated again and again for different studies, revealing something that millennials have often expressed in the past few years: they simply can’t afford to buy homes like their parents did.
The study was published under the title Straddling the Gap. The full study takes a closer look at the current state of housing affordability in every Canadian province, as well as the major cities within that province. The study’s findings are stark but perhaps not wholly unsurprising. The primary take away of the study was that Canadians in the millennial generation are figuratively stuck in a situation where their earnings simply do not increase enough to keep up with the steadily rising price of real estate. In other words, the cost of living has increased–but millennial’s paychecks haven’t increased along with them.
In many cases, the study found that Canadian millennials are working more than one job just to make ends meet; with this in mind, it is no wonder that Canadian millennials find it impossible to afford real estate. According to the study’s calculations, the average Canadian millennial would need to double their average income just to bridge the gap between housing affordability and their salary.
More specifically, the report calculated out just how long Canadian millennials would need to save money in order to save up enough for a 20% down payment in the current housing market. The results were astounding. In Vancouver, Canadians in the millennial generation would need to save for 29 years–in other words, their entire lifespan!–just to save up for a 20% down payment on a home being sold in the current market. This figure is similar in other major cities; in Toronto, for instance, millennials would need to save for 21 years. This is compared to the same statistic in 1976, which found that Canadians within the 25 to 34 age bracket would need to save for 5 years in order to build up enough for a 20% down payment in the 1976 housing market.
With this report and its striking statistics in mind, it is no wonder that Canadian millennials are unable to purchase homes and are opting for renting apartments and renting homes instead. As housing continues to become less affordable due to rising prices, and millennials average income does not rise along with it, it will only become more and more difficult for millennials to purchase homes the way preceding generations did.