Reports are increasingly showing that parents are helping their children purchase their first home in the GTA. This phenomenon of parents helping their children purchase their first home is not a new trend by any means, but the numbers they are willing to fork out are. This is becoming a common trend due to the increase of the cost of living (rent), debt amount (student loans), and saving money in general becomes harder and harder.
We are seeing now, first time home buyers, more and more, are coming with gift letters from their parents with $10,000 dollars plus to put towards their new home. Some speculation as to why this is increasing, especially in the GTA, could be due to the soaring home prices. The average home in Toronto will run you approximately $533,797 (combined for houses and condos alike), with this price being as high as it is, it is no wonder that first time home buyers would need all the help they can get. Typically what we are seeing, is that parents are offering the funds out of the kindness of their hearts, as opposed to the children asking for help. The parents see this changing market increasing in price, they know their children will be struggling to pay off everything in time. That being said, if parents have extra money to spare, they feel it best to put it towards their children’s first big purchase and investment.
Another reason why parents opt to help chip in or, pay in full, the down payment, is to reach the 20% of the purchase price down. By doing this, you avoid having to pay the insurance fee required for purchases with less than 20% down. Based on these findings, it seems first time home buyers, whether it be for a condo or residential home, are important to the real estate market as buyers.
Contact Robert Clancy today for all your first time home buyer needs!