Financial Support for Homebuyers: A Growing Trend
Adrian C. Spitters, CFP?
I Execute Tax-Efficient Investment Portfolio Solutions So That Your Business, Family, And Estate Assets Are De-Risked And Protected Against Financial Risk, Economic Threats, Inflation And Higher Taxes.
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Source Article: Who's helping homebuyers? The gift that keeps on giving
It Starts with Gold:
The Foundation of Wealth Preservation
Gold is the foundation of a well-diversified investment portfolio that includes income-producing private alternative assets like private equity and private real estate. These investments can help fortify and de-risk your portfolio against financial institution risk, economic threats, inflation, and higher taxes. Gold has long been considered a safe haven in times of economic uncertainty. Its value is stable, making it a reliable hedge against inflation and market volatility. Gold represents security and confidence, serving as a foundation for wealth preservation.
The Rising Trend of Family Gifts: A Lifeline for First-Time Homebuyers"
In 2021, as the COVID-19 pandemic influenced all aspects of life and the real estate market surged, a study explored the trend of gifting towards down payments. Recent data from CIBC indicates that this trend continues, with financial assistance from family members remaining a crucial source of down payments.
Rising Gift Amounts for First-Time Buyers
The data reveals that 31 percent of first-time homebuyers received financial help from family members, a significant increase from 20 percent in 2015. Although the percentage has plateaued recently, the average gift amount has continued to rise, even as home prices have decreased from their pandemic peaks. Currently, the average gift amount for first-time homebuyers is $115,000, marking a 73 percent increase from 2019 levels.
Mover-Uppers and Family Gifts
Mover-uppers, or those purchasing larger homes, also benefit from family gifts, though to a lesser extent. About 12 percent of mover-uppers use gifted funds, with the average gift amounting to $167,000. This is higher than the average gift for first-time buyers, reflecting the typically higher cost of larger homes.
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Regional Differences in Gift Amounts
There is a strong correlation between gift amounts and home prices. Despite a 14 percent decrease in benchmark home prices since their pandemic peak, prices remain 33 percent above pre-COVID levels. Consequently, gift amounts have increased faster than home prices during this period. This rise in gift sizes is likely facilitated by parents downsizing and capitalizing on high home prices from selling their principal residences.
Ontario and British Columbia (BC) exhibit a higher reliance on gifts for first-time home purchases due to their high home prices. In these provinces, 36 percent of first-time buyers receive gifts, compared to the national average of 31 percent. The average gift in BC is $204,000, significantly higher than Ontario's average of $128,000. Since 2019, gift amounts in BC have increased by 90 percent, exceeding the national average increase of 73 percent, while Ontario has seen a 52 percent rise.
For mover-uppers, the likelihood of receiving a gift in Ontario and BC aligns with the national average of 12 percent. However, the average gift amounts are higher in these provinces, with Ontario at $189,000 and BC at $230,000, compared to the national average of $167,000. Nationally, the increase in gift amounts for mover-uppers since 2019 is 97 percent, with BC seeing a 46 percent rise and Ontario experiencing a 93 percent increase.
Impact on Wealth Gap
This phenomenon helps mitigate the impact of housing inflation for buyers but also contributes to widening the wealth gap in Canada. As housing affordability remains a critical issue, financial gifts from family members continue to play a significant role in enabling home purchases.
Strategic Investment Solutions for First-Time Homebuyers
Given the challenges of saving for a down payment, first-time homebuyers can consider alternative investment strategies. One effective approach is to invest in Real Estate Investment Trusts (REITs) focused on multifamily rental apartments instead of traditional savings accounts or investment accounts. This strategy allows investors to participate in the real estate market's income potential while potentially avoiding the risks associated with direct homeownership in volatile market conditions. The demand for rental properties continues to rise due to demographic shifts and immigration trends, making multifamily rental apartments an attractive option for portfolio diversification.
Why Gold Should Be the Foundation of Your Portfolio
Gold's stability and reliability make it a strong foundation for a well-diversified portfolio. Its value remains steady even in times of economic turbulence, offering protection against inflation and financial uncertainty. Given the potential vulnerabilities in the financial system, having a secure and tangible asset like gold is paramount.
Combining gold with investments in private real estate, such as multifamily rental apartments, can further enhance portfolio diversification. This approach not only safeguards wealth but also taps into the growing demand for rental properties driven by immigration and demographic changes. By investing in both gold and private real estate, investors can build a robust, resilient portfolio that mitigates risks associated with financial intermediaries and systemic financial collapse.
Complimentary Portfolio Evaluation
As a valued reader, I am offering a complimentary portfolio evaluation to discuss how investing in alternative assets such as private equity, private real estate, precious metals, commodities, government-sanctioned flow-through tax-efficient structures, and tax-minimizing corporate insurance solutions can help to fortify and de-risk your portfolio against financial institution risk, economic threats, inflation, and higher taxes.
To book your consultation, email me at [email protected] or use my Calendly Link. Alternatively, you can contact New World Precious Metals to discuss purchasing options for physical precious metals.
In these turbulent times, it's crucial to ensure that your portfolio is well-positioned to withstand potential economic challenges and market fluctuations. By considering the incorporation of Gold, you may be able to fortify your investments and better navigate the complexities of the current financial landscape.
A Partnership for Holistic Wealth Management
As a dedicated advocate for de-risking business, family and multi-generational wealth, I am partnered with one of the leading independent private wealth management firms. My team serves high-net-worth clients nationwide. We provide professional investment management and comprehensive wealth planning solutions from a fiducially focused, client-first perspective. We provide access to sophisticated tax-advantaged strategies and solutions traditionally reserved for the ultra-affluent.
We are driven by a "capital preservation first" philosophy. Our team generates consistent, tax-efficient returns uncorrelated to public markets. By leveraging our expertise, you are granted access to key industry professionals, gaining exclusive entrance into alternative investments such as private equity, private real estate, precious metals, commodities, government-sanctioned flow-through tax-efficient structures, and tax-minimizing corporate insurance solutions offered through mutual life companies. All are designed to fortify, secure and de-risk your family, business and estate assets against financial risk, economic threats, inflation and higher taxes.
To receive a complimentary digital copy of "Who's Investing Your Money?," email me at [email protected] or book a complementary portfolio evaluation with me through my Calendly Link.
The Custodial Model: An Additional Layer of Protection
In light of the revelations in David Rogers Webb's book The Great Taking, to further safeguard wealth, the firms I work with employ a custodial model, where client assets are held securely by an independent third-party custodian rather than commingled with the firm's assets. This crucial segregation of assets provides an additional layer of protection, reducing the risk of seizure or misappropriation in a financial crisis or institutional insolvency. The custodial model offers investors a safeguarded solution to help secure their wealth separately from the investment management firm.
Watch The Great Taking Documentary
Additional Resources:
Exploring the U.S. for Wealth Security
Amid economic uncertainty and high taxes in Canada, many affluent Canadians are considering relocating their wealth to the United States. The U.S. offers a more favourable tax environment and stronger asset protection laws. Peter J. Merrick, a renowned cross-border specialist, assists Canadians in navigating international wealth management complexities, facilitating seamless asset transfers to diversify holdings and safeguard their hard-earned assets from potential risks.
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