Shelter prices are so over-valued relative to income levels today, that saving just a 10% downpayment now takes 12 years on average, compared with just 5 years to save a 20% deposit twenty years ago. In many cases, people are trying to circumvent the waiting and saving period by borrowing even the downpayments. Whatever the approach, inflated shelter costs are keeping people from being able to meaningfully save for other critical necessities like education and retirement, and this is leaving the society increasingly vulnerable.
It now takes about 7.5 years to save up for a down payment on a house in Toronto. In Vancouver, that number is over 10.5 years.
The data comes from the National Bank of Canada, which calculated how much it would take a median-income earner in several cities across Canada to save up enough for the minimum down payment on a median-priced home assuming they saved 10 per cent of their income.
This post was published at FinancialSense on 05/10/2017.