Edmonton offers a shorter path to home ownership than other cities

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The journey to home ownership in Edmonton is a shorter one than in most cities, a new study shows.

Point2Homes recently published a report looking at the time first-time buyers need to save up for a 20 per cent down payment to purchase the average priced home, based on the local median income.

Edmonton ranked third among 20 cities for the shortest timespan of four years.

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“This reflects what I see daily,” says realtor Nathan Mol with Liv Real Estate. “Edmonton remains affordable for first-time buyers.”

The study looked at the timelines for different generations — from generation Z to baby boomers — though most first-time buyers fall into the “young millennials” category, aged 25 to 34.

For them, in Edmonton, their median annual, individual income is about $49,000, and the average home price the study used was $194,600. In turn, they need to save $38,900 for a 20 per cent down payment.

Only Quebec City required less time at 3.3 years where the average income is about $52,000, and the average priced home is about $170,000. Gatineau, Que., was the second least expensive at four years to save only with a higher median income (about $54,000) than Edmonton despite a higher price at nearly $217,000.

In contrast, the city where it takes first-time buyers to purchase the longest to save for a down payment in the study is Markham, Ont. There, buyers need 15 years to save more than $133,000 for the average priced home of $667,250. That’s based on a roughly $45,000 annual income.

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Mol notes many Edmonton first-time buyers are in their late 20s to mid-30s, especially couples, and about half are purchasing with a 20 per cent down payment.

Many in the last year have been looking at townhomes and apartments given the lower price points amid higher borrowing costs that have eroded their purchasing power.

Realtors Association of Edmonton statistics from August show the average price of a single-family detached home was $546,000, up 10 per cent year over year.

In contrast, the average priced townhome was about $291,000, up about 15 per cent from the same month last year.

Apartment condominium’s average price was about $204,000, up about 17 per cent. Notably, the apartment average price is even higher than the price cited in the Point2homes study.

A more accurate price for first-time buyers in Edmonton is about $340,000 with a five per cent down payment, says Edmonton mortgage broker Marc Crossman with Enrich Mortgage Group.

“The mortgage type for the past couple of years has been five-year fixed (rate),” he says about first-time buyers.

“It’s hard to provide a typical rate because rates change all the time,” but using the average for the past year of 5.53 per cent, the monthly mortgage payment for this price would be about $1,977. That’s based on five per cent of purchase price saved for a down payment.

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Using the median salary cited in the study, it’d take less than two years to save for the $17,000 down payment.

Crossman adds the few first-time buyers purchasing with 20 per cent down payments are usually receiving financial help from parents.

Down payment size aside, fewer first-time buyers are in the market than Crossman is used to seeing. Typically, this group makes up about 60 to 70 per cent of clients, “but this year is a bit of an anomaly” where first-timers make up about 30 per cent of business.

That’s likely a reflection of higher borrowing costs, which should change as interest rates decrease. As well, the recent federal amendment allowing for 30-year amortization mortgages, coming into effect in December, will likely boost activity among first-time buyers.

Yet Crossman is sceptical it will improve affordability much.

“Instead of being content with a lower mortgage payment, first-time buyers will likely use the extended amortization to qualify for a higher mortgage amount,” he says.

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