SOURCE: Vancity Credit Union

Vancity Credit Union

May 11, 2016 08:30 ET

Vancouver Millennials Have the Least Purchasing Power in Canada

High Shelter Costs and Lower Incomes Could Mean Going Into Debt for a Basic Lifestyle

COAST SALISH TERRITORY/VANCOUVER, BC--(Marketwired - May 11, 2016) -  A typical millennial couple that buys a property at an average price in Vancouver will go into debt by $2,745 per year, says a new report by Vancity credit union.

The report, No Funds City: why Vancouver millennials have the lowest discretionary income in Canada, found that Vancouver millennials have the least amount of discretionary income compared with their counterparts in 10 other Canadian cities.

In 2015, a typical Vancouver millennial household of two, aged 25-34, earned $72,291 -- the second lowest rate in Canada. After essential expenses including taxes, clothing, healthcare premiums, food, public transportation and utilities, about $41,609 would be leftover. Subtract ownership costs of more than $44,354 annually for a property at an average cost in Vancouver, and millennial families are in debt.

After Vancouver, Toronto had the next most expensive housing market at $33,405 annually for a property at an average price purchased in 2016. It also had the next lowest discretionary income at $3,379 annually for millennial couples who purchased property. While millennials in Victoria are better off than their counterparts in Vancouver (instead of being in debt, couples who purchased a property at an average price in 2016 have a discretionary income of $12,200 annually) overall they still ranked third lowest when it comes to discretionary income. By comparison, the average millennial in Edmonton has more than $47,000 in annual discretionary income -- the highest in Canada.

The report also found:

  • By limiting themselves to purchasing a townhouse at an average cost, Vancouver millennial couples would have about $9,549 annually in discretionary income.
  • By limiting themselves to purchasing a condominium at an average cost, Vancouver millennial couples would have about $16,422 annually in discretionary income.
  • By renting outside the city centre, Vancouver millennial couples would have about $27,940 annually in discretionary income for a typical one-bedroom unit, or $15,183 for a three-bedroom unit.

For average millennial families with one child in full-time paid care at an average cost of $14,580 annually, affordability is a much bigger challenge:

  • An average millennial family that purchased property at the average Vancouver price in 2016 would go into debt by $17,325 per year just to cover basic expenses once childcare costs for one child are introduced.
  • If the same family purchased a three-bedroom condo (more suitable for a family over a smaller condo) in Vancouver at average cost in 2015, they would go into debt to the tune of $29,597.
  • By renting a three-bedroom unit, Vancouver millennial families save on shelter costs but will still only maintain $771 a year for spending, saving, giving or paying down debt.

The report makes recommendations to increase the amount millennial families will have to invest toward their well-being, including providing more incentives to support rental housing. Millennials may also need to reconsider home ownership as a primary wealth-generation tool.

Quotes

"The status quo isn't good enough if we want this generation to be able to put down roots, possibly have a family and still enjoy a basic quality of life in Vancouver and Victoria."

- William Azaroff, Vancity's vice-president of community investment

Additional information

Backgrounder: Vancity's investment in affordable housing

Report: Rising prices trap Metro Vancouver families in starter homes

Report: Housing crisis could trigger labour crisis as Millennials leave region

Product: Vancity's Mixer Mortgage

About Vancity

Vancity is a values-based financial co-operative serving the needs of its more than 519,000 member-owners and their communities in the Coast Salish and Kwakwaka'wakw territories, with 59 branches in Metro Vancouver, the Fraser Valley, Victoria, Squamish and Alert Bay. As Canada's largest community credit union, Vancity uses its $19.8 billion in 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.

Tweet us @vancity and connect with us on Facebook.com/Vancity.

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