According to new data from the Ontario Real Estate Association (OREA), a substantial number of young Ontario homeowners are getting an added financial boost from their parents to enter the housing market.
Conducted by Abacus Data for OREA, the Housing Affordability in Ontario: Perceptions, Impacts, And Solutions (Wave 2) report found that four in 10 parents of young, homeowner adults (aged 18 – 38) helped their child financially with their big purchase.
In comparison, a report released in October by CIBC revealed that 30% of first-time homebuyers across the country drew upon the bank of the parents. Furthermore, according to the Toronto Regional Real Estate Board (TRREB), a significantly lower 17% percent of young homeowners in the notoriously pricey city received financial help from "family and friends" to secure their first home.
Given the state of Ontario’s housing market -- one characterized by relentlessly low supply, unwavering demand, and record-smashing prices -- cash from generous parents may be the only chance young people have to enter the increasingly unattainable market. After all, one-third of all Canadians under the age of 40 have now given up on the dream of home ownership.
Panoramic aerial view of the city of Toronto and surrounding suburbs. Lake Ontario, blue and yellow tones, urban area. Skyline, cityscape,
According to OREA, of those who helped their children, 44% dipped into their own general savings to support their child’s dream, with 15% borrowing from their own retirement savings or investments. On average, those who loaned money lent $40,878, while those who gifted money gave $73,605. For parents of those young adults who do not own property, 91% of them say that it is important that their children be able to eventually buy a home.
Of the parents surveyed, they overwhelmingly recognize that it is more difficult to buy a residential property today compared to when they were in their 20s (oh, the good old days), citing high housing prices (88%) and the difficulty of saving for a down payment (49%) as the top contributing factors. Other factors include a less secure job market, expensive education costs, and fewer homes being built.
“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 OREA CEO Tim Hudak. “Ontario’s parents have seen first-hand the benefits of homeownership on 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.”
The rest of Ontario agrees. Regardless of age, 92% of Ontarians believe we need to do all that we can to make sure that future generations have the same opportunity to own a home as the generations that came before. The risk, should Ontario get it wrong, is real: 80% of Ontarians believe that the cost of housing in Ontario is making the province a less attractive place to live and work.
Aerial View Of Subdivision Homes In Vaughan Ontario
Continued Calls for Improved Housing Supply
The solution (aside from these generous down payment gifts from the parents) is to ramp up housing supply, says Hudak.
“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 increasing housing supply and choice in the market, across the province.”
The majority of Ontarians agree, with 52% saying we are not building enough housing supply in the province.
While Ontario has drastically improved the number of new starts -- in 2021, the province saw the highest level of housing starts in over two decades at nearly 100,000 -- Ontarians want to see further political emphasis on housing affordability. According to OREA, 76% of those polled believe housing affordability should be a high priority for the Ontario government, but feel it currently is a moderate to low priority.
Since the OREA poll, however, the newly-formed Ontario Housing Affordability Task Force has recommended -- among a slew of other suggestions -- that the province aim to build 1.5 million homes in the next decade by increasing density in urban and suburban areas, as well as updating the development approvals process employed by municipalities.
Whether this is enough to revive the great Canadian dream of homeownership in Ontario remains to be seen. In the meantime, the parents will likely keep coming to the rescue for their fortunate offspring.