Vancouver parents giving kids $180K on average to buy first home, report finds
Parents are coughing up an average of $180,000 to help their adult children enter the Vancouver real estate market, according to a new report highlighting the widening wealth gap in Canada.
The CIBC report found approximately 30 per cent of first-time homebuyers across the country are relying on the Bank of Mom and Dad to afford their down payment, receiving an average gift of $82,000 during the first three quarters of 2021 – less than half of what Vancouver parents are apparently spending on their children.
Even Toronto parents are spending significantly less than their Vancouver counterparts, gifting an average of $130,000 to their offspring, according to the report.
Vancouver realtor Kate MacPhail with Stilhavn Real Estate Services told CTV News more than half of the first-time homebuyers she works with get help from their parents. She said parental support can also be a deciding factor when buyers find themselves in a bidding war for a particular property.
"If we need to go over and above what they had initially planned on spending, then oftentimes the parents will help out to get them up to that level," said MacPhail.
And it's not just younger homebuyers in their 20s and 30s needing help from their family. MacPhail said she's worked with first-time buyers in their 40s who require their parents' support to enter the market.
Parental gifts get even bigger for existing homeowners looking to upgrade, according to the CIBC report. Those buyers received an average of $104,000 across the country during the first three quarters of the year, $200,000 in Toronto and a whopping $340,000 in Vancouver.
MacPhail, who has worked in real estate for 11 years, said these kinds of gifts have become much more common – and necessary – over the years as rents and real estate prices have increased.
"It's really unusual for somebody to have saved $100,000 or $200,000 by the time that they're in their 30s just by working and saving," she said. "Most of my clients are already paying $2,500 a month or more in rent. Some of them who have kids are paying $4,000 a month for a three-bedroom, so being able to save on top of that is almost impossible for most people."
CIBC estimates that such gifts totalled upwards of $10 billion this year, accounting for 10 per cent of down payments across the country.
Report author Benjamin Tal, deputy chief economist of CIBC World Markets, noted the trend widens the wealth gap between potential homebuyers who benefit from financial assistance from their parents and those who do not.
“That increase in the gap is much larger than the actual gift size as it might make the difference between owning and not-owning a house, with receivers potentially benefiting from future home price appreciation,” he wrote, adding that smaller mortgages also lead to significant interest payment savings over time.
MacPhail said she tries to find creative ways to help clients without parental help enter the market, such as borrowing from their RRSP to purchase a starter home well within their means and then upgrading a few years down the line.
"I can get them into a one-bedroom condo under $525,000 just taking that money out of their RRSP," she said. "Five years after that, with today's mortgage rates, they've probably paid down $80,000 on the principal … that puts them in a position to put over $100,000 down on their next home."
With files from CTVNews.ca's Solarina Ho
CTVNews.ca Top Stories
4th Indian national arrested, charged with murder of Hardeep Singh Nijjar
Homicide investigators in B.C. say murder charges have been laid against a fourth Indian national in connection to the killing of Sikh activist Hardeep Singh Nijjar outside a Surrey gurdwara last year.
'I am angry': Alberta farmers will continue fight over world class motorsport resort
The rolling hills leading to the hamlet of Rosebud are dotted with sprawling farms and cattle pastures -- and a sign sporting a simple message: No Race Track.
Man ticketed after allegedly trespassing again at Drake's Bridle Path mansion to get his bike
A man who tried to access Drake’s Bridle Path mansion earlier this week returned to the property Saturday and was apprehended again for allegedly trespassing, Toronto police say.
Couple randomly attacked, 1 stabbed, by group of teens in Toronto, police say
A man has been transported to hospital after police say he was stabbed in a random attack carried out by a group of teens in Toronto on Friday night.
Millions of Canadians have been exposed to potentially toxic chemicals, and they're not going anywhere
For decades, North Bay, Ontario's water supply has harboured chemicals associated with liver and developmental issues, cancer and complications with pregnancy. It's far from the only city with that problem.
Biden calls Trump 'unhinged,' says 'something snapped' in former president after he lost 2020 U.S. election
U.S. President Joe Biden on Saturday called Donald Trump “clearly unhinged” and claimed that “something snapped” in the former president after he lost the 2020 election.
Wildfire that forced evacuation of Fort Nelson, B.C., caused by tree falling on wires, mayor says
The wildfire that prompted the evacuation of more than 3,000 people near Fort Nelson, B.C., was caused by a tree falling on wires, according to the municipality's mayor.
Switzerland's Nemo wins 68th Eurovision Song Contest
Swiss singer Nemo won the 68th Eurovision Song Contest on Saturday night with 'The Code,' an operatic ode to the singer’s journey toward embracing their nongender identity.
IN PICTURES Northern lights dance across the night sky in southern Ont.
From London, to Grand Bend, Collingwood and Guelph, here are some highlights of Friday night and Saturday morning's northern lights display.