Canada

Canadian Households Now Need Up To 32 Years To Save For A Downpayment: NBC

Canada’s hottest real estate markets for young adults are far outside of the city. That’s because saving the down payment to be in some cities, would take the majority of their adult lives. National Bank of Canada (NBC) found a sharp deterioration of affordability in Q1 2021. The median household now needs to save up to 3 decades to have the minimum down payment for any non-condo housing.

Saving A Down Payment For Canadian Real Estate Takes Over 7 Years

The median household in Canada’s urban composite needs to save a looong time for a down payment. It would take the median household 7.52 years to save just the minimum in Q1 2021. This is 87.53% longer than the historic average since 2000, which is 4 years. Remember, this assumes home prices and incomes grew together. If home prices grew faster than incomes, it would take even longer.

Canadian Months of Saving For A Downpayment

The number of months the median household has to save for the minimum downpayment on a non-condo home. The savings rate is assumed at 10%.
Source: NBC; Better Dwelling.

Toronto Non-Condo Down Payments Take 25 Years To Save

In Greater Toronto, it takes decades just to save the minimum down payment for a non-condo. The median household needs to save for 24.74 years as of Q1 2021, for the minimum down payment. Historically, the average has only been 4.85 years, so it’s about 410% longer these days. A 25-year-old household would be around 50 by the time they saved for the extra space. Just in time to have kids, right?

Vancouver Non-Condo Down Payments Take 32 Years To Save

Greater Vancouver real estate now takes over 3 decades for a non-condo down payment. The median household needs 32.45 years to save the absolute minimum as of Q1 2021. It’s 176.56% longer than the historic average of 11.73 years. Which to be honest, was already a very high barrier. On the upside, just think about how sweet that non-condo will be when you’re 57, and sign up to start that 25- year mortgage.

Montreal Non-Condo Down Payments Take 4 Years To Save

For a little perspective, Greater Montreal has seen huge price growth, and it takes a fraction of the time. The median household needs 3.34 years to save the minimum down payment for a non-condo, as of Q1 2021. This is 45.29% higher than the 2.3 years it historically takes to save. It’s much faster than the rest of Canada, but still very high compared to historic norms.

Canada really hasn’t seen anything this large historically. However, it has seen very big surges in the length of time it takes to save a down payment. Usually, home prices have fallen, but no one thinks that’s realistic right now. Although that was the case with all historic price climbs, right before home prices fell.

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  • Ian 7 months ago

    In before an agent says you’re supposed to buy a condo that appreciates at 4% to fund the downpayment on a detached rising at 25%, because math is harder than it looks apparently.

  • D 7 months ago

    You will own nothing, and you will be happy 😉

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