A new report has found that Canadian baby boomers are helping their children finance their first home purchases by giving them a living inheritance.
The 2017 Generational Trends Report found many young homebuyers can’t afford real estate without help because of rising housing prices and mortgage rates.
The report, by the Mustel Group and Sotheby’s International Realty Canada, surveyed 2,026 urban baby boomers in Vancouver, Calgary, Toronto, and Montreal.
In a release, Mustel Group principal Jami Koehl said baby boomers make up close to 30% of Canada’s population and have had a significant impact on the housing market.
“Results from this recent survey reveal how this influential cohort is specifically making a mark on a new generation of homebuyers in the country’s largest metropolitan areas,” said Koehl.
Across those metropolitan areas, one third of boomers surveyed plan on giving funds to their children with the goal of helping them acquire real estate.
Some 82% of those getting a living inheritance are using it to buy a first home, says the report. The rate was highest in Vancouver at 90%; in Calgary it was 86%, in Toronto 83% and in Montreal 74%.
One third of the boomers surveyed across Canada have seen strong return rates from their initial investments, with most indicating their investments outperformed their expectation.
Many respondents endorse the real estate markets in their cities because they are confident of a similar return in the future.
The average amount gifted, according to the report, ranges between $25,000 and $50,000 in the Vancouver, Calgary and Toronto markets.
In Montreal the range is lower, between $10,000 and $24,999.
Unsurprisingly, according to the report, those giving out the funds believe that without the gift, their children wouldn’t be able to secure a conventional mortgage.