Young Canadians lean on family assistance to enter housing market

• Rising home prices in Canada are forcing first-time buyers to rely on family financial assistance, increasing the average age to enter the market
• Affordability challenges and bidding wars have created intense competition for homes priced under $700,000
• Experts emphasize early financial education and strategic mortgage planning, including paying down loans faster, to counter rising interest rates and long-term cost

Family money: The growing gap between home prices and wages in Canada is forcing buyers to rely on family money, particularly among the younger generation of prospective first-time home buyers. With down payments increasingly out of reach for many, financial assistance through family gifts or inheritance offers a much-needed lifeline for those hoping to enter the housing market.

"The knock-on effect will likely be the continuing increase in the average age of first-time home buyers," says Christoper Micheletti, real estate broker from Adresz Real Estate Network. Based on Statistics Canada data from 2023, 43% of first-time home buyers are now over 35, and only 24% are under 30. The percentage will likely grow for those over 35 and shrink for those under 30. "Overall, it takes longer to save enough to afford a property, even with family help."

First-time buyer trends: "The average home price in Montreal is around $750,000 and the benchmark for properties that often see family assistance is typically under $800,000," Micheletti says. The trend is more pronounced in properties under $700,000, the price point typical for first-time home buyers, where bidding wars are most common.

Market shifts: The Canadian rental market is showing mixed trends in terms of growth and stagnation. While investment properties have slowed due to high interest rates and renovation costs, vacant units remain a hot commodity. "Buyers value the ability to renovate and set rental prices as they see fit," says Micheletti.

Planning and amortization: For buyers seeking affordability, the Bank of Canada’s 30-year amortization option offers an extended repayment period. But Micheletti advises paying down mortgages early to offset rising interest costs. "Even with insured mortgages and lower down payments, making additional payments at renewals is critical to reducing long-term interest burdens."

Building financial literacy early: Micheletti stresses the importance of saving and financial education from a young age. "Parents need to teach kids budgeting, savings, and the costs of living early on to build habits that lead to progressive savings growth." For those who may have started thinking about a home later in life he adds, "The most important thing for those who want to eventually own property, is that they need to ensure that they set money aside every month and invest it to ensure that they can slowly grow their down payment."