Even Top 5% Earners Struggle to Afford Homes in Canada

Even Top 5% Earners Struggle to Afford Homes in Canada
April 26, 2024

A recent analysis reveals that even individuals in the top 5% of earners in Canada face significant challenges when it comes to affording a home. Despite their high income, they often find themselves unable to save enough for a down payment, let alone secure a mortgage for a decent property.

According to data from Statistics Canada, the 95th percentile of pre-tax income for different age groups is:

  • 20-24: $56,400
  • 25-29: $93,000
  • 30-34: $120,000

Assuming a top earner saves 10% of their gross income annually, they would have accumulated approximately $122,000 by age 35. However, this amount falls short of the required down payment for even a basic home in major cities like Vancouver and Toronto.

Soaring Housing Costs

For instance, a 2-bedroom, 2-bathroom property in Vancouver costs around $1.2 million, while a 1+1 bedroom property in Toronto is priced at over $900,000. In Hamilton, a century home in downtown area costs around $700,000. In each case, the top earner's savings would only cover a fraction of the down payment.

The Reality

This highlights the harsh reality that even high-income individuals face significant barriers to homeownership in Canada. The struggle to save for a down payment, combined with the need to prioritize other expenses like retirement contributions, food, rent, and emergency funds, makes it difficult for top earners to achieve their dream of owning a home.

The situation is further complicated by the fact that these individuals have likely made significant sacrifices in their 20s and early 30s to achieve their high income and savings rate. Despite their hard work and talent, they are still unable to afford a decent home, let alone enjoy the fruits of their labor.

A Call for Change

In conclusion, the data suggests that even being in the top 5% of earners does not guarantee homeownership in Canada. The reality is that even high-income individuals face significant challenges in affording a home, and this trend is likely to continue unless there are changes in the housing market or government policies to support affordable housing.


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