Saving for a home a lengthy effort

Saving for a home a lengthy effort

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But condos ‘excellent option’ for first-time, solo buyers

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When my parents bought their first home in Agincourt in 1960, it cost less than two times my father’s annual salary, which was the norm rather than the exception. Their grandchildren, however, wonder when they’ll have a down payment large enough to achieve what was once a basic life step.

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That’s especially true for those who’ve set their sights on one of Ontario’s eight major cities, where the benchmark home costs more than $1 million.

Point2 Homes, an international real estate search portal, has crunched the numbers to find out just how much time buyers need to save for a home and whether single buyers stand a chance to save up as quickly as couples in this province.

“In order to get an affordable mortgage – meaning one that wouldn’t eat up more than 30 per cent of their income – buyers would have to cover what the loan doesn’t, which could represent much more than the traditional 20 per cent that everyone expects,” says Andra Hopulele, author of the study (https://www.point2homes.com/news/canada-real-estate/singles-couples-saving-for-home.html).

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“Whether they’re single or a couple, covering the difference between the home price and the mortgage is an incredible financial effort. And based on the 50/30/20 rule where 20 per cent of the income should go toward savings, it’s a lengthy one, as well. It would take years upon long years to save enough to buy a home, so home seekers could rightfully start feeling like homeownership is not an attainable goal.”

In Ontario, single homebuyers face the toughest journey, requiring up to 75 years to save the necessary amount in the largest cities analyzed. Couples fare a little better, but still need between 21 and 27 years to save enough in the province’s priciest markets: Vaughan, Markham and Richmond Hill.

In Richmond Hill, single-income buyers need nearly half a century more of saving compared to couples, with Newmarket and Vaughan rounding out the top three with a 40-year difference. Thunder Bay stands out as the only city in the province where the saving gap between singles and couples is under four years.

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But a few of the country’s largest cities are emerging as what Hopulele dubs ‘real homeownership havens.’ “There, no matter if they’re single or coupled, first-time buyers have an almost equal chance at becoming homeowners without spending their entire lives saving for their home,” she says.

In Strathcona County, Alb.; Lévis, Que.; and Regina, Sask., the difference between singles and couples’ timeframes for saving was the shortest. “This means the affordability gap between single buyers and couples was the smallest and buyers would have almost equal chances at becoming owners, no matter their status,” says Hopulele.

While high borrowing costs and a cost-of-living crisis have made it difficult for homebuyers to enter the market, especially for solo buyers or those dependent on a single income, opportunities for homeownership still exist for single buyers within the condo market, especially outside of the Greater Toronto Area, according to Zoocasa.

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In January 2024, the national benchmark price for a condo apartment was $526,500 – that’s $200,000 lower than the benchmark price of a single-family home, according to the Canadian Real Estate Association. In more expensive markets like Greater Toronto and Greater Vancouver, the price difference between a condo and a single-family home can be even larger.

That positions condo apartments as the most affordable property type and an “excellent option” for first-time home buyers or single-income buyers, Zoocasa reports. To find out which cities are the best for buying a condo with a single income, it analyzed benchmark price data for condo apartments in 22 markets and calculated how many months it would take a homebuyer earning the after-tax average income to save for the minimum down payment.

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According to its findings (www.zoocasa.com/blog/best-canadian-cities-buying-condo-single-income-2024/), it would take an average income earner in Toronto 10 months to save the required minimum down payment of $43,260. Single condo buyers in Toronto need to save twice as long for a down payment than single buyers in Ottawa, while single-income condo buyers in Hamilton-Burlington need to save for 7.6 months to be able to afford the minimum down payment of $29,550.

Out of 22 cities, Edmonton, Alta. is the most affordable for buying a condo on a single income. It would take an average income earner just 2.1 months to save up for the required down payment of $9,005. Not only do Edmonton single buyers benefit from low condo prices, but the city also has one of the highest average incomes of the cities Zoocasa analyzed at $50,680.

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Solo buyers in Vancouver, B.C. face the hardest challenge saving up for a down payment on a single income. It would take the average income-earner who lives alone 12.2 months to be able to save up for the required down payment of $50,190. Persons living alone in that province’s capital earn an average after-tax income of $49,440, which is less than the minimum down payment and makes Vancouver the only city on Zoocasa’s list where solo buyers have to save for more than a year.

In Ontario, London and St. Thomas is the most affordable place for solo dwellers to purchase a condo. A single buyer earning $43,560 would need to save for just 4.8 months to afford the $17,570 minimum down payment. Ottawa is the next most affordable place in Ontario for solo condo buyers, thanks to a relatively high average after-tax income of $50,480 and an affordable benchmark condo price of $418,500.

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