Canadian households have been saving at one of the highest rates ever recorded. They saved an extra $167 billion last year, and everyone thinks it’s going to be spent in their industry. Statistics Canada (Stat Can) data shows this might sound a lot larger than it actually is when broken down. It’s definitely going to provide a boost to spending. However, everyone didn’t get a down payment-sized windfall like many assume.
Canadian Households Saved An Average of $13,500
Canadian households started stashing away a lot more cash during the pandemic. The average net savings per household was $13,546 in 2020, about $12,389 higher than the previous year. It’s quite a bit of money, considering households saved an average of less than $2,000 the year before. It doesn’t quite have the same ring as households saved $167 billion though, does it?
Canadian Average Household Savings By AgeThe average net savings for Canadian households in 2019 and 2020, grouped by the age of the household head. Source: Stat Can; Better Dwelling.
In order to save a downpayment at this rate, it would take just a few years… or decades. If every year were like the pandemic, it would take an average of 3.5 years to save a downpayment on a typical home. If every year was like the year before the pandemic, it would take about 41 years. Buyers will be ready somewhere between 3.5 and 41 years if home prices stay still.
Households 35 and Under Saved About 1/7 The Price Increase of Homes
Breaking it down by the age of the household head, those under 35 saved a little more than average. These households on average saved $20,577 in 2020, up $13,357 from the year before. It may seem like a decent amount, but a typical home increased at 7x the amount of savings in 2020. The 2019 dollar value is about 1/19 the size of the home price gains. If home prices stall here, and a pandemic continues forever, they’ll totally nail this.
Canadian Average Change In Household Savings By AgeThe dollar change in the average net savings for Canadian households from 2019 to 2020, grouped by the age of the household head. Source: Stat Can; Better Dwelling.
Households 35 to 44 Years Old Saved The Most
Households led by people between 35 to 44 years saved more — the most of any cohort, actually. On average these households saved $30,375 in 2020, up $15,412 from the year before. First-time buyers in expensive cities on average are in this cohort.
Older Households Saved Less On Average
Households led by people between the age of 45 to 54 saved just a hair less than the younger cohort. On average these households saved $29,325 in 2020, up $18,001 from the year before. This demographic is more likely to already own a home but might be looking for an upgrade. This cohort’s savings were boosted by just a little over the monthly increase for homes in April. Increased savings, but homes are a lot more expensive than a year ago.
Households 55 to 64 Years Old Saved Less Than $1,000 In 2019
Older households are saving a lot less than those a little younger, with those led by people aged 55 to 64 seeing a sharp drop from the last cohort. The average household in this demographic saved $14,225 in 2020, up $13,558 from the year before. Yeah, they saved just $668 for the whole year in 2019 on average. This demographic is very likely to own their home though, and likely see it as a “forced’ savings plan, like many do.
Senior Households Are Spending, Not Saving
Canadian seniors aren’t saving, they’re spending a lifetime of savings. The average household in this cohort spent $11,053 of their savings in 2020, which is $5,865 less than the year before. Pandemic supports helped to offset a significant chunk of spending. This demographic is still a net-spender though.
There are a lot of expectations for these pent-up savings, which sound huge. The real estate industry expects it to fuel downpayments. Economists see it as boosting household consumption (dinner, anyone?). In reality, when averaged, it’s just a few months of income these households saved. There’s a good chance it’s about the size experts say people should have saved for an emergency… like few before the pandemic had.
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