TERRITORIES OF MUSQUEAM, SQUAMISH AND TSLEIL-WAUTUTH NATIONS and VANCOUVER, British Columbia, Jan. 14, 2025 (GLOBE NEWSWIRE) -- A new report from Vancity highlights the evolving challenges faced by younger individuals and singles in Vancouver’s housing market. As home prices rise, even moderate to high-income households are navigating new obstacles to homeownership. However, opportunities for innovative solutions and supportive guidance could help make the dream of homeownership more attainable.
Key Findings:
Singles and Younger Buyers Struggling to Afford Homeownership
Housing Costs outpacing Income Growth: Since 2018, the average monthly household income of Vancity members increased by 27%, reaching $13,300 in 2024. However, monthly mortgage payments surged by nearly 53%, climbing to $3,400, outpacing income growth.
Generational Gap: The average monthly income of Vancity mortgage-holders aged 43-58 is $14,400, compared to $11,800 for buyers aged 19-30, highlighting a stark income disparity between younger and older buyers.
The Rise of "Inheritocracy" and Down Payment Barriers
Soaring Down Payments: The average down payment for buyers aged 19-42 in 2024 was $287,300, a 37% increase from 2018. For first-time buyers, the average down payment rose by 20%, reaching $179,000 in 2024.
This signals a dependence on family wealth, supported by Statistics Canada data showing that over 20% of residential properties owned by people born in the 1990s were co-owned with their parents, fueling the growth of an ‘inheritocracy,’ where family wealth plays a significant role in accessing homeownership.
Canadians Finding Creative Solutions to Rising Housing Costs
Rental Income: 12% of new homebuyers are renting out part of their property to generate additional income, helping offset rising costs.
Extended Mortgage Amortization: In late 2022, 53% of Vancity members extended their mortgage amortization, a significant increase from less than 20% in 2018, likely in an effort to ease short-term financial strain.
The Cost of Rent Remains High Despite Decrease
Renters’ Financial Vulnerability: 21% of Vancity member renters reported being unable to cover an unexpected $5,000 expense, compared to just 5% of homeowners, highlighting the financial risks renters face.
According to rentals.ca, Vancouver remains the most expensive rental market in the country, with the average cost of a one-bedroom apartment at $2,534 per month. Although rent has decreased by 11.6% over the past year, affordability remains a significant challenge for renters.
“Many young people feel locked out of homeownership. Among buyers aged 19-42, the average down payment in 2024 was $287,300, up 37% from $209,400 in 2018. Given their average household income, it’s no surprise many feel homeownership is out of reach,” said Joe Reid, Vancity’s VP of Wealth Management and Impact Investing.
These factors may be blocking many younger people from entering the housing market—unless they have financial support. Studies cited in the report show that home ownership rates among Canadian in their 20s and 30s are significantly higher among those who have received an inheritance compared to those who have not.
“This trend has been dubbed ‘inheritocracy’ and is creating an inequitable environment where owning a home can feel nearly impossible for first-time buyers without inherited wealth or family assistance,” Reid explained.
“While some segments of the market may seem out of reach, there are actually affordable options available that can work for a variety of budgets,” said Reid. “By coming in early, we can help you plan effectively, ensuring you make the most of your opportunities as they grow.”
“There’s plenty of reason for optimism,” Reid added. “Homeownership has long been seen as the gold standard in Canada, but it’s not the only path to wealth and financial stability. With the right advice and planning, people can still achieve their dreams of homeownership or explore other viable options. At Vancity, we can support you with alternatives like investing in the market or looking into stable, affordable living arrangements, such as housing co-operatives, which offer a sustainable way to secure long-term housing while building wealth.”
The full report is available on Vancity’s website.
About Vancity
Vancity is a values-based financial co-operative serving the needs of its 570,000 member-owners and their communities, with offices and more than 50 branches located in Metro Vancouver, the Fraser Valley, Victoria, Squamish and Alert Bay, within the territories of the Coast Salish and Kwakwaka’wakw people. With $35.5 billion in assets plus assets under administration, Vancity is Canada’s largest credit union. Vancity uses its assets to help improve the financial well-being of its members while at the same time helping to develop healthy communities that are socially, economically and environmentally sustainable.
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