With home prices at a record high across Canada, it’s not uncommon for adult children to get some support from the Bank of Mom and Dad just to get their foot on the property ladder.
In Ontario, more than a third of parents with kids aged 18 to 38 years old financially helped out with their home purchase, according to new insights released by the Ontario Real Estate Association (OREA) today.
New polling research conducted by Abacus Data for OREA shows that four in 10 parents of young, homeowner adults helped their child financially with a residential property purchase. The survey was conducted with 2,000 Ontario adults throughout mid-January.
According to the report, titled Housing Affordability in Ontario: Perceptions, Impacts, And Solutions (Wave 2) report, 44 per cent of the parents who provided financial support for their children’s home purchase dipped into their own general savings. About 15 per cent borrowed from their retirement savings or investments, while eight per cent of parents took out a mortgage or downsized to help their children.
Those who gifted money towards a home purchase tended to provide a sum of $73,605 on average, while those who loaned money to their kids for buying a home gave $40,878.
“Parents are becoming increasingly worried that their children may not be able to achieve the dream of home ownership, so they are pulling out all the stops to help them get their foot in the market,” said Tim Hudak, OREA’s CEO, in a press release.
“Ontario’s parents have seen first-hand the benefits of homeownership [in] neighbourhoods: it fosters vibrant and stable communities, improves quality of life, and has been the bulwark of Canada’s middle class for generations, so it is not surprising that they want the same for their children,” he added.
Compared to their children, it seems that the majority of Ontario parents acknowledge that there are greater challenges with buying a home these days compared to when they were in their 20s. Parents attributed rising home prices (88 per cent) and the difficulty of saving for a down payment (49 per cent) as some of the main contributing factors.
For parents of young adults who do not own property, 91 per cent of them stated that it is important for their children to eventually buy a home. Regardless of age, 92 per cent of Ontario residents believe that more needs to be done to ensure that future generations have the same opportunity to own a home as previous generations.
SEE ALSO:Home price growth accelerates in January, sees stronger increases for third consecutive month
Otherwise, 80 per cent of Ontarians believe that the cost of housing in the province is making Ontario a “less attractive place to live and work,” according to the report. More than half of those surveyed (52 per cent) believe that not enough housing supply is being built. Many attributed long approval times for new housing, developers holding back on developing land and a lack of support for neighbourhood density influences driving a lack of homes being created.
“We are in a housing affordability crisis being driven by severe lack of supply, and increased demand, especially around ‘missing middle’ type properties. Without meaningful action at all levels of government, Ontario’s millennials and young families will be forced to look outside the province for their first home, leading to brain drain and negatively impacting our economic competitiveness,” said Hudak.
“To bring affordability home for young Ontarians, we need to be continually increase housing supply and choice in the market, across the province,” he added.
