How long would millennials have to forgo avocado toast to buy a home in Canada?
How many years would millennials have to go without $19 avocado toast if they wanted to buy a home in Canada?
The question comes amid an uproar over comments by an Australian developer, who said millennials should stop spending that kind of money every day if they want to save for their own property.
Tim Gurner told 60 Minutes Australia that millennials who wanted to enter the country’s housing market would have to clamp down on daily expenses like toast and coffee.
“When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each,” he said.
Global News took these remarks and applied them to the Canadian housing market. The Canadian and Australian dollars were about at par on Monday, so the cost applied equally in both contexts.
In Canada, you need to make a down payment of at least five per cent on a home that’s worth less than $500,000 in order to qualify for mortgage loan insurance, according to the Canada Mortgage and Housing Corporation (CMHC).
RBC’s most recent housing affordability report pegged the average price of a Canadian home in all housing categories at $458,100.
A five per cent down payment on such a property would be $22,905. Spending $19 on avocado toast every day, as Gurner suggested millennials do, would cost $6,935 per year.
That means millennials would have to go just over three years without their daily avocado toast.
But buying an average-priced home is even more difficult in certain cities.
In the Vancouver area, the average price of a home in all categories was pegged at $999,900.
And homebuyers have to put more even money down to buy a home that costs over $500,000: five per cent on the first $500,000, and 10 per cent on any amount above that.
A millennial would have to forgo their daily avocado toast for almost 11 years if they wanted to make a down payment on such a property.
It’s not much easier for potential homebuyers in the Toronto area, either.
The average price of a home there was $760,300 in RBC’s report. Making a down payment on such a property would mean millennials couldn’t have their toast for over seven years.
This analysis doesn’t account for future potential home price increases.
Gurner’s remarks triggered a round of anger and mockery on social media.
But the developer is far from the first to use avocado toast as a symbol of millennial spending.
Last year, Bernard Salt wrote in The Australian that members of Generation Y could save plenty for a deposit on a home if they stopped spending $22 on avocado toast “several times a week.”
Research noted by The New York Times showed that U.S. millennials aged 18 to 34 don’t spend more frivolously on dining or travel than other age groups do.
Assuming a 20 per cent down payment on a median-priced U.S. property, it would take millennials over a century to save up to buy a home, if they took on baby boomers’ dining habits, it reported.
© 2017 Global News, a division of Corus Entertainment Inc.