According to a Bank of Montreal (BMO) survey, 42 per cent of Canadian first-time homebuyers as well as 42 per cent of upsizers are banking on financial help from family.
The amount of first-time buyers hoping for support from the so-called Bank of Mom and Dad is up 12 percentage points from the previous year’s survey. Without family help, 40 per cent of first-time homebuyers indicated they wouldn’t be able to afford the big purchase. On average, these buyers plan to make a downpayment of 19 per cent, or $59,413. Typically, first-timers are budgeting for $312,700, a drop from $316,100 in 2014.
Interestingly, 50 per cent of upsizers surveyed said they’d be unable to afford their home without financial support from their relations. They expect to spend $473,900, with a 26 per cent down payment.
Population growth for the 25 to 34-year old demographic in major cities is partly to blame for the uptick.
“The increase in competition from a growing number of Millennial buyers is helping to push up prices in some major markets, leading some first timers to rely on financial support to help them enter the market,” said Robert Kavcic, Senior Economist, BMO Capital Markets.
And as competition increases, so do bidding wars. According to the survey, 48 per cent of first-time buyers said they’d be willing to enter the fray, a significant increase from last year, when 35 per cent indicated they would. Meanwhile, 36 per cent of upsizers said they would be willing to enter a bidding war.
The survey of 2,007 Canadians, aged 18-years old and older, was conducted by Pollara.