According to a new survey by Royal LePage, over a third of first-time homebuyers in Canada received a lump sum from parents or relatives to aid them in purchasing their first property. Additionally, 67% of these buyers expressed concerns that their down payments might be inadequate.
The study, published on Thursday, explored the primary trends among first-time homeowners who purchased a home within the last two years. Tom Storey, a sales representative for Royal LePage Signature Realty, emphasized that the most significant challenge for these buyers is amassing a big-enough down payment. A notable solution often involves the use of familial financial support, often referred to as the “bank of mom and dad.” Buyers are typically given tens of thousands of dollars from family members towards the purchase of their first home.
Storey further highlighted that the average first-time buyer in hot real estate markets such as the GTA and Vancouver tends to be part of a dual-income couple in their thirties. He also noted an increase in the average buyer’s age over time, indicative of rising affordability issues that compel potential buyers to delay their purchasing plans.
The survey also showed that 25% of first-time buyers reported receiving financial assistance with their monthly mortgage payments. Interestingly, 46% of these buyers said the financial assistance they received was a gift.
The affordability concerns influenced not only when but also where and what type of property these buyers chose. The survey revealed that 34% of first-time homebuyers had to purchase homes in different neighbourhoods or regions from their original preferences due to affordability constraints. Additionally, 32% had to opt for a smaller property than initially planned.
Phil Soper, president and CEO of Royal LePage, acknowledged the ongoing challenges for Canadians trying to enter the real estate market. Such hurdles include high interest rates, stringent mortgage qualification standards, and the difficulty of saving enough money for a down payment within a reasonable timeframe. Nonetheless, many still regard homeownership as a worthwhile goal.
Storey added that the majority of surveyed buyers were willing to compromise on their housing dreams to secure a place in the market. Many are prepared to settle for a smaller property or a condominium as an initial step towards homeownership, intending to leverage that equity for a better home in the future.
Information for this story was found via Royal LePage and CP24. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.