It’s no secret that the cost of homeownership has skyrocketed over the past decade; the national average price for homes sold in January 2019 was just under $455,000, which could be intimidating for a young adult who wants to break into the market but is likely just at the start of their career. However, a new report by Zoocasa highlights areas where the millennial making an average income could possibly buy a home – and on a single income at that.*
Most affordable cities to buy a home on a single budget
Though most of the top affordable cities are located in Eastern Canada and the Prarie provinces, Regina topped the list. Single home buyers could reportedly benefit from increased affordability in Regina, as the average home costs $284,424, requiring a minimum income of $38,798 to purchase. And since the median income for those aged 25 to 34 in Regina is $58,823, millennials could enjoy an income surplus of $20,025 if they were to buy the average home.
Second on the list is Saint John, where millennials reportedly earn $42,888 on average, meaning they would see a surplus of $18,038 on the average $181,576 home. Edmonton also followed closely behind Saint John, where earning $64,036 (the median income for millennials) would net a $17,826 surplus on the average home price of $338,760.
Other affordable spots for single buyers included Calgary, Lethbridge, Winnipeg, and Halifax.
Most expensive cities to buy a home on a single budget
Predictably, the least affordable cities for single buyers were Vancouver and Toronto. For example, the median income for those single and aged 25 to 34 in Vancouver is $46,308. If one were to buy the average Vancouver home priced at $1,019,600, they would require an income of $139,082 at least. That being said, the average single millennial would fall almost $93,000 short if they wanted to buy the average home.
Similarly, in Toronto, the median income for all single people aged 25 to 64 is $55,221, yet the income required for the average home is $102,079. Single people in Toronto would need to essentially double their income in order to afford the average $748,328 home.
Other reportedly unaffordable cities for single buyers included Victoria, Guelph, Kitchener-Waterloo, London, Montreal, and Ottawa.
Lack of affordability aside, millennials are still taking the risk, as those aged 25 to 34 made up half of the country’s first-time home buyers last year, according to The Canadian Mortgage and Housing Corporation (CMHC)’s annual Mortgage Consumer Survey.
The Zoocasa report also goes hand in hand with another report recently released by Point2Homes, that surveyed prospective young home buyers to understand if they’ve saved enough for a down payment. According to the report, the national average down payment is $25,000, and while 66 per cent of those surveyed said they want to buy a house in one year’s time, only half have saved enough to make the down payment. Meanwhile, 35 per cent admitted to only putting aside less than 10 per cent of their income for a down payment, and some of those surveyed said they haven’t saved anything at all.
Even if potential home buyers have a fair chunk of change put away, many are still underestimating exactly how much they’ll actually need. In Vancouver, 80 per cent of those surveyed think they need less than $100,000 saved to buy a home; in reality, the average buyer needs to make a down payment of nearly $300,000 on a home. In fact, a down payment alone in West Vancouver could buy you a home outright in many of Canada’s biggest urban centres.
Do you truly know how much it will cost you to buy a home? If you’re on a single income, things may seem dire, but not impossible if you do your research. Use the handy RateSupermarket.ca mortgage affordability calculator to find out how much you can afford based on your current income and lifestyle.
*To calculate market affordability, the average and benchmark home prices were sourced from regional real estate boards; it was then assumed the buyer would make a 20% down payment and take out financing with a 3.29% interest rate amortized over 30 years, to determine the minimum income required to qualify for a mortgage on the average home. Those findings were then compared to median income data of “persons living alone who earned employment income” as reported by Statistics Canada.