When seeking advice on how to save up for a down payment, first-time homebuyers are often given one piece of advice: cut down on everyday luxuries. But how practical is this advice, really? Last year, the Ratehub.ca team investigated just how many everyday luxuries a Canadian would have to give up to afford a down payment on a home. Since then, Canada’s national average home price has decreased. We’ve crunched the numbers to, once again, find out exactly how many everyday luxuries Canadians would have to give up to afford a down payment in 2018.
The current average price of housing in Canada is $496,000 and Canadian home buyers put down an average down payment of 10%. Using these numbers, we calculated that on average, you would need to save $49,600 for a down payment in Canada. From there, we looked at the average price of popular everyday luxuries that people commonly purchase and calculated how much of each you would need to give up to afford the average down payment amount.
What do I have to give up?
Lattes from Starbucks can be an everyday expense for some Canadians. However, we’ve estimated that most Canadians are willing to indulge in a Starbucks drink around 3 times per week. At an average price of $4.00 per drink, you would need to forego 12,400 Starbucks lattes to afford a down payment over the course of 80 years.
Canadian city-dwellers and suburbanites have come to rely pretty heavily on Uber to get from place to place. According to online estimates, the average cost of an Uber ride in May 2018 was $18.22. Canadians would have to give up 2,723 Uber rides over 27 years to afford a down payment if they typically take 2 Uber trips per week.
Brunch is a Sunday morning staple. If we assume each brunch runs you roughly $25 once a week, you would have to give up a total of 1,984 brunches for a down payment. You’re looking at 39 years of no brunch to save up.
Having fun on a Friday night comes with a pretty hefty price tag in many Canadian cities. Your average night out will typically run you at least $65 once you add up the drinks, cover, cab and food. If giving up nights out is your primary saving strategy, you would have to give up a total of 764 nights out to afford a down payment on a home. That equates to 8 years of cozying up on a couch instead of hitting the nightclubs on your night off.
Vacations are a great way to relax and unwind from the stress of a 9-to-5 job. If you and a partner were to take one, week-long all-inclusive vacation to Mexico per year, it would cost you approximately $900 per person. You would have to bid adieu to an all-inclusive vacation for 28 years to afford a down payment in Canada.
Our calculations are just one way of putting into perspective just how many everyday luxuries you would have to give up to afford a down payment. But saving for a home doesn’t have to include giving up all of your everyday indulgences! If you are serious about buying property, a good place to start is to use a calculator to determine how much of a mortgage you can afford. With the right saving strategies, home ownership will be within reach in no time.