Homes are so expensive in Canada that many younger people today require help from their family in order to make the down payment. According to a recent report from CIBC Capital Markets it looks like for many first-time home buyers in Toronto that they are being given around $130k from parents to make that down payment for their home.
The avg down payment gift for a new house is $130k
Not everyone has parents or family that are available to help them like this and for that reason many Canadians are priced out of the real estate market. It has gotten so bad that a variety of financial experts have suggested over the years that the Canadian housing market is in a possible bubble and that might one day this real estate bubble might be headed for a crash.
However, there are others who insist that perhaps this market will always go up, defying expectations and pricing even more Canadians out of the market as it goes up.
Over the past year in Canada there was $10 billion gifted to adult children so that they could be able to buy homes.
It has been estimated that about one third of those home buyers are getting help from parents. About one third of those first time Canadian home buyers are getting help from their parents so that they will be able to have the finances to make the transaction possible.
Another recent report ranks the Toronto and Vancouver housing markets to be some of the worst in the world today as far as bubble territory goes. The Vancouver and Toronto housing markets are seen by some to have a very high bubble risk, according to the 2021 Real Estate Bubble Index by UBS, along with other regions like Frankfurt, Hong Kong, Munich, and Zurich.
The truth is that many Canadians are being continually priced out of the cities that they live in. And with inflation hitting recent highs things, worse than they had seen in 18 years, the situation is worsening in that it is becoming more expensive for everyday life in Canada and housing affordability. The cost of food and other goods is going up and expected to persist into next year.
Food banks are already preparing to see a rise in demand as the situation gets more costly for Canadians and they find themselves struggling to make ends meet.
First time home buyers are being priced out of the market as things continue to get more expensive. There are not many families who have the salary required to be to afford the down payment or the average home in the Lower Mainland that could easily cost millions of dollars for a single family home.
In areas around BC you can find many Canadians paying more than 30% of their income on their rent alone. Through the recent election that saw Trudeau win once again we heard that affordability was one of the biggest issues for Canadians. Various representatives have made promises about building houses and addressing this issue.
Some communities are looking to help those first home buyers with their down payment to make it possible for them to be able to achieve that dream of home ownership.
But these programs aren’t enough to meet the need that there is and they aren’t a long-term solution to the problem of why houses are so unaffordable in Canada.
It is estimated that some 36% of young adults in Canada have already given up on the dream of owning a home one day.
No matter how hard some of those young adults might work they still just don’t think it is possible for them and with that comes a lot of potential psychological harm say experts, stress, and frustration.
Spotlight Grows on Housing Affordability Crisis in Canada
Housing affordability matters to Canadians and they have in the past made it clear that this is a top voting issue, affordability of housing and general living is a top priority for many in the country today.