What kind of house can the average millennial afford to buy, depending on where they want to live in Canada?
People aged 25 to 31 years old earn an average salary of about $38,000 a year, according to a report Thursday by Royal LePage, which translates into a typical maximum homebuying budget of about $203,000.
That won’t go very far. The aggregate Canadian home value sits at about $605,500, Royal LePage says.
“A growing number of peak millennials will save, pool their money with a partner and/or borrow funds from their parents, many of whom are downsizing in retirement and can financially contribute to their child’s first home purchase,” the real estate company said in a release.
“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.”
A 20-per-cent down payment for a home in Greater Vancouver or the Greater Toronto Area – about $160,000 – is about the same price as a home in Moncton.
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The average Canadian home was listed for $325,000 to 425,000 in the first quarter of the year, and got you 1,269 sq. ft. spread out over 2.7 bedrooms and 1.8 bathrooms.
In Greater Vancouver, that cash would only buy you 788 sq. ft. with 1.5 bedrooms and 1.2 bathrooms.
That’s if you can even get them. There were only five active listings in Vancouver itself between $325,000 and $425,000.
Millennials are already buying the least expensive homes at the bottom of the housing market, said Royal LePage advisor Adil Dinani.
But with housing prices continuing to rise, he said, they’re starting to compete with homebuyers who wouldn’t usually be buying cheaper homes.
“From what we are observing, the majority of purchasers within this age range are getting assistance from their families to find enough money for a down payment on a starter home,” said Dinani.