It’s estimated that it now takes 23 years to save for a down-payment for a home in Vancouver. Housing prices in the region are sky-high compared to incomes, and it has also been estimated that by 2020 monthly payments on a single-family home will exceed the average monthly income in the city.
The benchmark price for an east-side condo as of April 2017 was $400,500, according to the Real Estate Board of Greater Vancouver. The benchmark for a townhouse was $720,300. Meanwhile, the median household income in Vancouver is just $67,000. Only 15 per cent of Metro Vancouver homes cost less than $500,000 and provide access to at least three bedrooms.
How Much Do You Need For a Down Payment In Vancouver?
If you want to live in Vancouver, you’re going to have to pay a premium… and plan to save nearly $2,800 a month for at least five years.
- Median home price: $1,098,599
- Average down payment: 15% = $164,790
- Monthly saving goal (5 years): $2,747
According to experts, over the coming decades the biggest issue in Vancouver will be getting the pricing down to make units available for those moderate incomes–the people who, by and large, make Vancouver work, as well as young professionals at the start of their career.
Increasingly, Boomer parents, who have benefited from the dramatic explosion in home equity over the past decade, are helping their Millennial children. A recent survey by the international bank HSBC found that 37 per cent of millennial home buyers receive some financial help from parents in order to close the sale.
While this may help your children break into a housing market that is increasingly out of reach for many young people, if you’re considering loaning money in this way, consider that you may be merely helping your kids get locked into a financial obligation they may not be ready to take on. For example, according to the HSBC survey, 21 per cent of millennials who recently bought a house borrowed from family after buying to cover unexpected costs.
There is the very real danger that, by lending money to help children break into the housing market, parents are instead placing a ticking time bomb that will destroy family finances sooner, rather than later.
And it’s not just the children who will be impacted.
The Increasing Cost of Helping Aging Parents
Boomers don’t only have to worry about helping out their children scale small monetary mountains. At the same time they have to worry about ensuring their own parents are taken care of as they age. And it can be expensive. The cost of caring for aging parents is estimated to cost Canadians $33 billion a year. This figure includes both direct, out-of-pocket expenses as well as time off work. This figure will only grow over time, finds a new report by CIBC Capital Markets.
The CIBC report estimates the direct and indirect costs associated with the elderly to mushroom by more than 20 per cent in real dollars over the next 10 years due solely to changing demographics.
An aging population combined with longer life spans and strained social services has in recent years seen more and more Canadians taking on the role of caregiver for their aging parents, and in the coming years, that tendency is only likely to intensify, according to the CIBC report.
Two million Canadians, or 14 per cent of those with a parent aged 65 or over, also pay out of pocket for elder-care expenses. On average, they spend $3,300 a year, for a total of $6 billion. Combined direct and indirect elder-care costs, the report notes, are $33 billion.
So ensuring your family is prepared and has saved up for elder care is going to be important.
Conclusion: Make Sure You Take Care of Yourself, First
Before lending money to adult children, Boomers should ensure they have not only prepared for their own retirement, but are on top of their own parents’ affairs as well. A major risk may be that a family spends all of its financial resources on aging parents and on children, but when it comes time for Boomers to receive care, they will need help from their Millennial.