The average first-time home buyer in Toronto receives $ 130,000 from the family

30 percent of first-time buyers received a monetary gift from the family of an average of $ 82,000


If you’re wondering how first-time homebuyers can afford the average Toronto real estate home ($ 1,136,280), look no further than the average $ 130,000 gift passed on from their family.

As property prices in Canada rise to record highs, the number of parents giving gifts to their children also rises to afford the payout. The size of these gifts is also growing.

According to a CIBC Economics report called Gifting For A Down Payment – perspective, just under 30 percent of first-time buyers in Canada made their purchase with a gift from a family member, a steady increase from close to 20 percent in 2015, which is about, when especially real estate in Toronto began a meteoric rise. And the average size of these gifts increased from $ 52,000 to $ 82,000. In the past year, gifts used for real estate payments in Canada accumulated to $ 10 billion

In Toronto, the average gift size for first-time buyers was $ 130,000 during the first three quarters of 2021.

The report by Benjamin Tal goes a long way in understanding how people can afford sky-high property prices in Toronto and other major cities in Canada.

The Swiss investment company UBS once again placed Toronto in the top two real estate markets in the world, sitting on the most risky bubble, where prices are too high in relation to income levels. But these prices are sustained by the greatest transfer of wealth the world has ever seen. Baby boomers pass on assets to new generations, driving home prices up with that privilege.

“I’ve seen it in person,” says Meray Mansour, a broker at RE / MAX Hallmark Realty, pointing out that there are people selling homes in the millions they originally bought at tens of thousands of prices. “Baby boomers in Canada have had the biggest jump in property prices in history. Kids are reaping the rewards now.”

“Parents either take out a mortgage on their property to give to their children and help them invest, or they pass on and the children get the property,” says Mansour, who explains that most of her own clients are repeat customers. . She either helps former clients who already own property upgrade or helps their children buy a home with the help of their parents.

And it is not only first-time home buyers who get the help according to the CIBC report. Nine percent of buyers upgrading their homes received an average gift of $ 128,000. In Toronto, the average is closer to $ 200,000. The most worrying state in the report says that the size of gifts has grown over the last half decade at a rate of 9.7 percent per year, which is out to pace inflation in house prices by two percent.

According to the CIBC report, gifts eradicate and widen the wealth gap between “recipients and non-recipients.” This difference is more marked than the five-to-six-digit gift amount, as it makes the difference between who can own and who does not want; who will win by further rising real estate prices in Canada, which will inevitably lead to long-term savings, and who will not.

@justsayrad

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