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Buyers could take up to 40 years to save a down payment, according to Point2
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Homeownership prospects are dim for Canadians, especially Generation Z for whom a down payment would require decades to save, says a new report.
“If you’re a young Gen Z looking to own in expensive cities like Vaughan, Vancouver, Toronto, Mississauga, and Brampton, saving for a down payment could be mission impossible,” the Point2 report said.
“The youngest renters here would have to religiously set aside a hefty 20 per cent of their monthly income for the next 25 to 35+ years to cover the current amount.”
The report offers two scenarios.
- Worst-case scenario: Given their low incomes, young renters in Canada’s 20 largest cities would need between 8 and 40 years to save for a down payment, which is the longest time of all the generations.
- Best-case scenario: Gen X renters, a cohort that roughly corresponds to the 45 to 54 age group, are looking at the shortest saving timeframe. They need between 2.5 and 12 years to cover the down payment in the same cities
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But John Lusink, president of RealServus Holding Corp., which owns Right At Home Realty, says there’s one, perhaps more obvious, way for younger people in the GTA to purchase starter homes.
“I have no clue how they’ll get in unless it’s with the assistance of the bank of mom and dad,” he said. “But then it’s qualification and income that hasn’t kept up with the way real estate has appreciated.”
He added that much of Gen Z is on course to become a permanent class of renters.
“Forty years is probably on the conservative side even; it’s incredible,” Lusink continued. “They’re going to move into being permanent renters.”
Daniel Johanis, owner of Pekoe Mortgages, says it isn’t just young people struggling with higher grocery and gas prices, but that they’re especially susceptible to the economy’s vagaries.
“Let’s just say they have kids in daycare which is incredibly expensive, and then their income isn’t increasing to a necessary level,” Johanis said. “It’s not easy to stay ahead of inflation, and with higher overall expenditures —just to keep the lights on — I don’t know how they can save for a down payment.”
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