It could take 40 years to save for downpayment on a home in these Ontario cities

A downpayment is the first step toward home ownership and how long it takes to save for one depends on several factors.

A first-time home buyer would have to save for up to 40 years for a downpayment in some cities, according to a new study from real estate website Point2 Homes.

Point2 surveyed people looking to buy a home and calculated the estimated downpayment needed in cities across Canada.

Despite the lengthy timelines to save and the high cost of living, many Ontario residents want to buy a home. The survey found 62 per cent of renters want to buy a home by the end of the year.

Seven in 10 renters have less than $30,000 in savings and 66 per cent expect to need less than $50,000 for a down payment.

But the reality many starter homes require more than $50,000 for a downpayment — particularly for properties in the GTA.

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“As home prices increased, the standard down payment for average homes and starter homes also went up,” Point2 Homes said.

Given that the benchmark home price is now close to $700,000, the 20 per cent down payment needed is close to $140,000.

“Saving around $70,000 represents an incredible financial effort for most renters, no matter their age and income,” Point2 Homes said.

In the most expensive areas — Vaughan and Markham — it could take from 10 to 40 years to save enough for a downpayment, even for a starter home. Potential buyers in this area will need over $130,00 for a downpayment.

Vancouver, Toronto, Mississauga and Surrey aren’t far behind with a downpayment of over $100,000 needed.

However, there are lower-priced options. Saving for a down payment in Ottawa and London, for example, will take much less time at just over $60,000.

The study also looked at how long each generation would need to save.

Gen X is looking at four to five years to save for a home in cities such as Ottawa and London while the youngest renters would need around 15 years.

The youngest renters in the GTA would have to religiously set aside 20 per cent of their income for 30 years, while the much better off Millennials are looking at around nine years.

See the full report from Point2 Homes here.

Lead Photo: Pixabay