Older millennials are facing major disparities in the properties they can afford to buy in Canada’s largest cities, according to a new report from Royal LePage.
With a median salary of $38,148, peak millennials (those born between 1987 and 1993, according to Royal LePage) typically have a maximum home-buying budget of $203,246. This figure factors in a 20% down payment, and the impact of the Office of the Superintendent of Financial Institutions’ (OSFI) new mortgage stress test, which has reduced the average peak millennial’s purchasing power by about 16.5% ($40,103).
Given the aggregate Canadian home value of $605,512, many must either bide their time or look for creative solutions to financing a home purchase. In many major cities across the country, a growing number of peak millennials will save, pool their financial resources with a partner, and/or borrow funds from their parents to enter the housing market.
“While peak millennials are largely able to afford their monthly mortgage expenses, coming up with an adequate down payment often proves to be the greatest hurdle to homeownership among the demographic,” Royal LePage said. “In areas with high home values, like Greater Vancouver and the Greater Toronto Area, a 20 per cent down payment can often equate to over $160,000, or roughly the same price as a home in Moncton, New Brunswick.”
“We have seen a rare pause this year in the relentless rise in the cost of housing,” said Phil Soper, president and CEO of Royal LePage. "For peak millennials, the group which makes up the bulk of our first-time homebuyers, the path to property ownership has been a challenging one.
“In our largest cities, it is difficult for young people to purchase a home on a single household income. Some will purchase homes with family or friends, and some are following the age-old practice of saving money and waiting until they can effectively double their maximum budget with a life partner.”
A dual income peak millennial couple typically has a maximum budget of $406,479, excluding any assistance from family or friends.
Also read: Young Canadians want to own a home but aren't planning for it
