125 or even 150k in GTA is a average pay in IT for a mid tier IT worker. I talk to people from other professions e.g. Bankers, non-IT white collar office goers most seem to make less than 70 k even in Greater Toronto. The most shocking I have seen is where my team is implementing Warehouse software for a F500 Manufacturer, the warehouse operators make like 50k generally, the senior most supervisor with 15+ years of experience makes 85k or so. These are all GTA pays, I was shocked to hear and learn of these jobs and people. I can't even imagine how they survive or pay their mortgages.
I can understand PRANIT01's dilemma and I was thinking last week where 'Windsor37' is getting his data from when he was talking about 500k Family income and 2.5M house prices.
The 2.5M house price came from an ad in the flyer from the mail. The home next to where I live, was sold for ~$2.2M last year. The townhouse price of $1.5M is from the listings I see just a few blocks from the SkyTrain stations near my place. I live quite far from downtown so these prices are relatively tame compared to downtown Vancouver, Burnaby or even Richmond.
Assuming you just immigrated in Canada from a 3rd world country meaning you don't really have substantial savings to begin with at least not enough for a house downpayment, and you want to start saving up for that downpayment.
> The average price of a new home is $2.5M, and you want to make a 20% downpayment, then you should save up 500K first.
> If the couple is only making 250K (125K per person). Their total post-tax income is 90K x 2 = 180K per year or 15K per month, if 3K goes to rent and 2K/month on food, utilities, etc. then they can save 10K per month. This means the couple needs at least 50 months before they can put in a downpayment, and this assumes that the price of the house doesn't change in the next 4 years.
> But average house inflation is around 5-10% per year, at 5% and 4 years, the average price of a new home would have gone from 2.5M to 3M, and at that point they have to wait 5 years before they can even place a downpayment.
So it will take you on average 5 years to place a downpayment on a home if you are perfectly fine of placing all of your income to the downpayment. This means NO retirement saving, NO education plans for the kids, NO family vacations, NO emergency funds, etc. But what if you DO want to save some money for retirement, maybe saving 5K/month for a downpayment sounds reasonable, and 5K/month goes to retirement, etc.
At that point, 500K / 60K = 8.3 years, but because of the natural housing inflation the minimum downpayment would have increased from 500K to 750K, so roughly 12 years. If you started this when you're 35, then you'll be ready to place a downpayment by the time you're 47, and that assumes that we're only looking at an average price increase of 5%.
So that's my viewpoint on it, and that's the viewpoint of some of my co-workers who had been living here several decades before, and they themselves admit that Vancouver's housing market is crazy, they were even sharing that once their kids got out of college, they all looked to move out of Vancouver simply because of how bad housing is. My co-workers are just staying because they were very lucky to be able to buy a property here 10+ years ago, and they're pretty much settled here.
Sure you could go for a condo or a townhouse, or drive 1+ hr a day everyday to work (one-way) and settle in a place far enough that it's cheap, or just pour all your hard-earned money on that downpayment with no regard for retirement. But at that point, I feel you're just lowering your standard of living/quality of life, and to me it's just isn't worth.
Don't get me wrong, Vancouver is NOT bad a city at all, and I'll rather be here than in Manila, any day of the year including winters. If you're perfectly fine renting for life, and you have enough to get by, then it's awesome, spring is great, winters calm (compared to the rest of Canada), great nature views if you're into that. It has enough interesting things to offer in the city, though not as much as Toronto; but that's just it. Vancouver is a city good enough to get by, but if you want to truly settle, I feel you'll probably want to look somewhere else.