When my parents bought their first house in the 90s you were able to loan ~120% of your home value so you could finance a new kitchen or even a car.
Not according to this article, where it mentions the average household income, not the average per-capita income. So you can expect it to take quite a bit longer than that to save for that down-payment, for the average person.
Home value goes up 10%, from 1 million to 1.1 million, 20% downpayment goes up from $200k to $220k. If you’re saving under $1666 per mo, you’re actually further away than you were last year.
In Vancouver, the average price is $1.36 million and it went up 21% in a year. For detached, $2.12 million/25% yoy.
Waiting and saving money is no longer a feasible housing strategy, unless you can save at least a few thousand every month.
You "save" by investing that savings in stocks (and may be some mix of bonds too if person is more fiscally conservative).
I'm not saying your wrong or that it's not a bad idea, but should you have to take risks by investing your deposit just so you can have the chance to take a bigger risk in the housing market? It's mental that that's the case these days
yes. There cannot be ways to obtain risk free returns that out-performs inflation. Where would that return come from if it was risk free? It must come, at some aggregate level, via other people's productivity growth. But this means it's a free lunch, and more and more people would try to take advantage of it, thus lowering the expected return of such a deposit scheme (however it is funded).
> the chance to take a bigger risk in the housing market?
A house is not a bigger risk than the stock market tbh. It's why the lender for the mortgage is willing to give some 5x leverage (20% deposit) vs a margin loan in the stock market (which at most they're gonna lend you 50% LVR), and at a higher interest rate even!
It's the fact that real estate is such low risk that so many people, esp. the poorer/middle income people who cannot take the risk of stock market, want to buy real estate.