A recent Globe & Mail article by Erica Alini highlights a growing trend among young homebuyers in Canada: relying on family gifts to enhance or provide their down payments. According to the Canadian Imperial Bank of Commerce (CIBC), nearly a third of first-time buyers now receive financial aid from their parents, with the average gift amounting to over six figures.
Increasing Reliance on Family Gifts
In recent years, the reliance on family gifts for down payments has surged. In 2021, only 20% of first-time buyers received such assistance, whereas, in 2024, that number has climbed to 31%. The average gift amount has also increased significantly, reaching $115,000, a 73% rise since 2019.
Current Trend: Wealth Transfer in Real Estate
This trend is particularly pronounced in British Columbia and Ontario, where housing affordability is at its worst. In B.C., the average down payment gift is slightly over $200,000, a 90% increase since 2019. Similarly, in Ontario, the average gift is now $128,000, up 52% from five years ago. These figures indicate that well-off families are mitigating the housing affordability crisis for their adult children by providing substantial financial support.
This significant shift highlights the challenges of housing affordability. For instance, the mortgage payment-to-income ratio in cities like Toronto is incredibly high at 82%, and saving for a down payment can take up to 28 years in Vancouver. For more detailed information, you can read the housing affordability analysis by National Bank.
Impact on Homebuyers and Housing Market
The report by Benjamin Tal and Katherine Judge from CIBC notes that this trend reflects the challenges young Canadians face in entering the housing market independently. The phenomenon also highlights the increasing wealth gap in Canada, as only well-off families can afford to provide such large gifts. This trend, while beneficial to young homebuyers, exacerbates the wealth disparity in the country. Additionally, the Vanier Institute of the Family shows that the percentage of people aged 25 to 29 living with at least one parent has increased from 17% thirty years ago to 31% today. For more information, refer to the Vanier Institute’s report.
How do you think family gifts impact the housing market and wealth gap in Canada? Share your thoughts in the comments below!
One of our clients in North Vancouver was able to purchase their dream home thanks to a generous down payment gift from their parents. This financial boost not only helped them secure a better mortgage rate but also made the home buying process much smoother.
If you’re considering buying a home and need guidance, contact us today for expert real estate advice and a personalized home buying strategy. Visit our Buyer’s Guide for more information. Additionally, consider looking for your North Vancouver Dream Home online or sign up for our home finder search.
About the Author:
Suzanne Callaghan is a top real estate expert in Metro Vancouver with over 12 years of experience. Passionate about matching families with their perfect homes, Suzanne provides personalized guidance and market expertise. Learn more about Suzanne here.