[Generational Study] Renters Still Want to Become Homeowners, but Saving for Down Payment Alone Would Take Decades

1.4K Reading time: 7 minutes

What the data shows:

---

• Conditions: If they decided to buy a starter home (which we considered to be homes priced at half the local benchmark price) and went for a traditional 20% down payment, renters in Canada’s largest cities would need to set aside 20% of their monthly income for 2.5 to 40 years to cover the down payment alone.
• Worst-case scenario: Given their low incomes, young renters in Canada’s 20 largest cities would need between 8 and 40 years to save for a down payment, which is the longest time of all the generations.
• Best-case scenario: Gen X renters, a cohort that roughly corresponds to the 45 to 54 age group, are looking at the shortest saving timeframe. They need between 2.5 and 12 years to cover the down payment in the same cities.
• Expectations vs. Reality: A nationwide poll performed on Point2 revealed that almost half of respondents expect the down payment to be less than $25,000 but, in Canada’s 20 largest cities, even starter homes would require up to $135,520.
• Starter homes availability: Although they are far from city center and could be in need of some TLC, in cities like Toronto, Edmonton or Vancouver there are up to 800 starter homes available. However, in cities like Laval, QC; Kitchener, ON; or Québec City, QC, less than 50 starter homes are currently on the market.

 

The Generational Divide: Ideal Homes Elude Young Renters for Years

Young renters want a home now, but need years of saving. Older renters could buy faster, but the pressure to own is off.

 

Young renters have the strongest motivation to become homeowners. Whether they’re simply moving out of the family home and looking for more independence, or starting their own family and in need of a right-sized, stable home, they’re the ones who stand to gain the most from attaining the owner status.

Aside from these more urgent needs, Gen Z and Millennials would also benefit the most from starting to build equity in their homes as soon as possible, especially given that their incomes and investment capabilities are lower than other cohorts’.

Of course, incomes are changing with age and experience, and lower down payments are an option, as well. But home prices are always going up, which means that, to many renters, buying a home feels like chasing a moving target.

The national starter home price is almost $350,000, which puts the 20% down payment at nearly $70,000. That’s a lot of money, and a nationwide poll performed on Point2 revealed that nine in 10 renters have much less than that set aside, despite wishing to buy a home within the year.

So how long would it take renters from each generation to save for a down payment in Canada’s 20 largest cities?

From 2.5 to 40 Years, Buyers From Different Generations & Cities Are Looking at Wildly Different Timelines

Gen Z bears the brunt of the headwinds wreaking havoc on the housing market

 

If you’re an older Millennial living in Québec City, saving for the down payment on a starter home in the city would take only 2.5 years. But, if you’re a young Gen Z renter looking to own in expensive cities like Vaughan, ON; Vancouver, BC; Toronto, ON; Mississauga, ON; and Brampton, ON, saving for a down payment could be mission impossible: The youngest renters here would have to religiously set aside a hefty 20% of their monthly income for the next 25 to 35+ years to cover the current amount.

One city that really stands out is Markham, ON. Here, with a high number of young people still in school and a low median income for this age group, it would take young renters an astounding 40.2 years to save enough for a down payment.

 

Switch between the tabs for more data on all the generations. Click on the label to reorder the 20 cities based on income, home price, or years needed to save for a down payment for each age group.

 

 

Although this could barely be considered a silver lining, in four of Canada’s 20 largest cities young renters who are thinking about becoming homeowners could save for a down payment in 10 years or less. It’s also possible that they’re opting for a 5% down payment. Even so, in most cities, Gen Z buyers might need to save for a very long time if they don’t have help.

Meanwhile, Millennials are doing slightly better. Young Millennials would still need a discouraging 15 years to buy a starter home in the most expensive large city but, for older Millennials, three years were sliced from this timeline, making them look at up to 12 years for a down payment. What’s more, in the other 19 of Canada’s 20 largest cities, older Millennials need less than 10 years of saving.

And the same goes for Gen X buyers. Much like their younger counterparts (and mostly due to their very similar incomes), they would also need between 2.5 and nearly 12 years to save for a down payment.

 

Six in 10 Renters Want to Buy Within Next 12 Months

They’re also laser focused on single-family homes

 

When it comes to their preferred timeline, it’s the youngest and the oldest home seekers who are the most determined: Seven in 10 Gen Z potential buyers and almost eight in 10 Baby Boomers older than 65 would like to buy a home before the year ends.

However, their income and financial capabilities are inversely correlated with their homeownership dreams: Gen Z and older Baby Boomers have the lowest incomes of all the age groups in the analysis, which means that, unfortunately, they’re looking at the longest saving time frames.

Young and older Millennials seem to be the most guarded. Nearly half stated that they’re not sure when they would want to buy a home.

 

 

This could be due to the fact that Millennials are more attuned to the very real, very substantial requirements of homebuying. Having reached an age where owning a home is tied to even more important life milestones like starting or growing their family and putting down roots, owning a home is no longer just an ideal, but a necessity.

Millennials are acutely aware of the high home prices, the prohibitive down payment amounts and the mortgage rates, which makes them hesitate and pushes them to the sidelines.

 

Determination Is Key, but Almost Half of Respondents Have Less Than $10,000 in Savings

And most save less than 10% of their income each month

 

Although 62% of all survey takers would like to buy within the next 12 months, almost half of respondents have less than $10,000 set aside for the down payment.

Unsurprisingly, Gen Z home-seekers were the least prepared, despite their desire and determination to become homeowners as soon as possible: 14% of young prospective buyers didn’t actually have any money set aside.

But, if this doesn't come as a big surprise given young renters' meager incomes, low savings come as a shock in the case of older Millennials, Gen X and even young Baby Boomers looking to buy: Just like their much younger counterparts, a similar share of buyers from these age groups reported that they had no savings for a down payment.

 

 

This is the point where the huge gap between renters' expectations and the reality of the housing market is starting to become apparent. Four in 10 respondents stated that they manage to save less than 10% of their monthly income. And that matches the current national saving rate, which reached 6.9% in the first quarter of 2024, but was actually much lower in the past two years.

During the pandemic was the only time when Canada's saving rate hovered around 20%, but those conditions are not replicable. Renters have much higher expenses so setting aside money for such a distant goal seems almost impossible.

 

 

It's older Millennials, Gen X renters and younger Baby Boomers who have the most difficulty saving for the down payment. Although they are the ones who should be driving demand, their hesitation to actually join the ranks of homeowners becomes apparent when considering their saving rates.

 

Expectations vs. Reality: 4 in 10 Renters Expect to Need Less Than $25,000

But in Canada's 20 largest cities, they'll need between nearly $35,000 and $135,000

 

As home prices increased, the standard down payment for average homes and starter homes also went up: Given that the benchmark home price is now close to $700,000, the 20% down payment is perilously close to a staggering $140,000. Looking at half these amounts for starter homes still means a lot of money: Saving around $70,000 represents an incredible financial effort for most renters, no matter their age and income.

But that is not what most home seekers are expecting. The gap between the reality of the market and homebuyers' estimations is wider than most would care to admit: 66% of respondents believed they would need less than $50,000, making it clear that their unrealistic expectations might be sabotaging their homebuying efforts.

 

 

Of course, potential homebuyers could find homes below the benchmark price, but starter homes are becoming increasingly scarce in many markets across the country, and the lack of affordable homes is, by now, the harsh reality.

Although the down payment for a starter home is less than $50,000 in five of the 20 most populous cities in the country, renters' expectations that $50,000 would be enough is far from the truth in most markets.

In fact, in Surrey, BC; Mississauga, ON; Toronto, ON; Vancouver, BC; Markham, ON and Vaughan, ON, the down payment alone is between $100,000 and $135,000.

 

 

This means that, despite the significant differences in income between Gen Z, Millennials, Gen X and Baby Boomers, saving for the down payment in these cities might take a really long time for anyone interested in finding their forever home in these areas — no matter which age group they belong to.

Despite their determination and will, many renters across Canada could be looking at a much longer saving period than they'd like, especially if they can't count on financial help from family.

 

Methodology

• For this study, we considered the 20 largest Census Subdivisions (Cities) based on the most recent data from Statistics Canada 2021 Census of Population.
• Starter home prices in all 20 cities were considered homes estimated to be priced at half the local benchmark price. The national benchmark home price was sourced from CREA and home prices for the 20 most populous cities in Canada were sourced from local MLSs.
• The 20% down payment amount was calculated based on the latest national benchmark home price and the benchmark home prices in each of the 20 most populous cities.
• The individual income for all age brackets was sourced from Statistics Canada 2021 Census of Population.
• This study was also based on a survey aimed at renters and homebuyers who visited or used the Point2 real estate platform.
• The survey was posted on Point2Homes.com between March and June, 2024.
• A total of 1,361 people participated, 890 of whom were renters. For this study, we only took into consideration the answers provided by renters.