Housing affordability is still far out of reach for millennials across the country, a new report says, with the average price of a house in Vancouver perched a particularly unattainable four times higher than what those prospective buyers could safely afford to pay.
The study, called Straddling the Gap, looked at the state of housing affordability in every Canadian province and their major cities.
It found millennial Canadians — those between the age of 25 and 34 — are stuck in a place where earnings aren’t rising enough to keep pace with housing prices.
On average, Canadian millennials would need to nearly double their average income in order to bridge the gap, according to the study. Either that, or the average price for a house would need to come down by half.
“These are massive numbers,” said the report’s lead author, Paul Kershaw, who described the numbers as a “troubling portrait.”
The report said the chasm between money made and money needed is widest in B.C. and Ontario, particularly in Vancouver and Toronto. The price of a house in the West Coast city is quadruple what any millennial could “safely” afford, and triple their budgets in the Six.
In Vancouver, millennials would need to make $200,400 every year in order to afford the average home. Torontonians would need an annual salary of $150,000.
The report said millennials in Vancouver would need to save for 29 years — around the amount of time they’ve been alive — to build up a 20 per cent down payment in the current market. The authors said it would take 21 years in Toronto.
The average time to save a down payment across Canada is 13 years, which is still eight years longer than it would have taken in 1976.
The problem is also pronounced in Victoria and Kelowna in B.C., and in Hamilton and Kitchener in Ontario. The report also noted Edmonton, Calgary, Halifax and Montreal as tight markets.
“Sometimes I think we think it’s only Vancouver or only Toronto and this report is showcasing for both provincial and especially federal policymakers, we see unaffordability going [far wider],” Kershaw told CBC’s BC Today.
The value of a house in Canada has exploded to a greater degree than any other consumer asset over the past decade, turning a home into a commodity that’s nearly unaffordable for Canadians who make an average wage. Prices have been falling recently, but Canadians are still tangled in debt that’s building faster than their incomes are growing.
“We’re seeing a dip and some levelling off … but if we level off here, we are levelling off at critical levels that leave a massive chasm or gap between what young people actually earn and the home prices that they’re facing,” Kershaw said.
The group behind Wednesday’s report, Generation Squeeze, included several recommendations to work toward fixing the disconnect.
They include a drop in other costs for Canadians — like student debt, transit and child care — to make more room for homebuying; and protecting prices in regions where real estate is more affordable, like the Prairies and Maritimes.