Nearly half of first-time home buyers will ask family or friends for financial assistance in order to purchase property, a new report by BMO found. The amount needed varies, but the range is quite vast.
While over 25 per cent of Canadians are looking for a monetary gift between $5,000 and $50,000, one in 10 Canadians are looking for $100,000 or more.
“Up against external headwinds, parents and family members are being asked to help first-time buyers enter the real estate market. While a financial gift can help, a home financing solution that fits a homebuyer’s budget is equally important,” Hassan Pirnia, head of personal lending and home financing products at BMO Bank of Montreal, said in a statement. “It comes down to ensuring that the home buyer can sustain the costs of homeownership on their own.”
Millennials are seeking more financial help than Gen Xers. On average, the younger generation is looking for $61,431, while the older generation is seeking roughly $43,400, according to the report, conducted by Pollara Strategic Insights.
It isn’t surprising that millennials need more help than their older counterparts to become homeowners. A recent Statistics Canada reportfound that while millennials have a higher income than Gen Xers did at the same age, they also have more debt. As a result, millennials are also living with their parents rent free in order to further save for a down payment.
Interestingly, more Canadians are starting to view homeownership as affordable, however, perspectives differ across the country. Atlantic Canada, for instance, has the lowest average home price at $326,700, according to the BMO report. There, 62 per cent of first-time buyers view the market as affordable.
This is significantly more than the 32 and 34 per cent of buyers in Ontario and B.C., respectively, who consider homeownership affordable. The average price of homes in these provinces is roughly $100,000 more than in Atlantic Canada ($443,705 in Ontario and $445,294 in B.C.).
Nonetheless, 30 per cent of Canadians expect to pay between $400,000 and $799,000 to enter the market for the first time.