It has come to a point where the younger generation of Canada find it hard to buy a house in the real estate market, no matter how hefty their down payment seems to be. These issues are as a result of the home prices in Vancouver and Toronto that keep soaring and putting the house at a less affordable price for an average young person struggling to save up their income to buy a home. For over 30 years the real estate market has been stable and affordable, but at this point, affordability is rising to a level that many cannot fathom or have experienced before.
The country faced this similar issue back in the 90s when the mortgage rates were short of 10 per cent while the country was going through a downturn. The present situation is not as worse as it was back then, but sooner or later it will come to that. According to the Royal Bank, the average cost of home ownership back in 1985 was at a 55.5 percent for the city, whereas for a detached home it was 71.4 percent for some with an average income. The prices of homes in Vancouver has always been on the high side, but it seems to have increased in the last few months as an explanation of the comparatively strong economy of the vicinity shows. The home prices have no connection whatsoever with the economic state of Vancouver, which places it in a different league.
The cost of a detached home in Vancouver is more than the cost of a typical household’s income before tax or deductions, making it less affordable and impossible for a regular person to get a detached home in Vancouver. Meanwhile in other places apart from the two cities, the price of homes are stable and remains affordable for any average household with the help of low-interest rates that has kept the rise of home prices balanced and the monthly payment of mortgages in check.
In Calgary, the percentage of a home ownership was at 38.3 percent. In Ottawa, it was 36.5 percent and in Montreal, it was at 42.8 percent. All of this was the average person’s income before tax deductions. Even in cities outside Vancouver and Toronto, the price of houses in the real estate market has gotten to the point whereby new home buyers are unable to meet the down payment price.