The Growing Challenge for Canadian Homebuyers: Parental Wealth Takes Center Stage
Adrian C. Spitters FCSI?, CFP?, CEA? President, Author, Private Wealth Advisor
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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It Starts with Gold
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 stable value makes it a reliable hedge against inflation and market volatility. Gold represents security and confidence, serving as a foundation for wealth preservation.
The Increasing Dependence on Parental Wealth in Canadian Real Estate
Are you a Canadian having a hard time buying your first home? Have you tried getting wealthier parents? CIBC crunched its numbers and found the role of parental wealth is playing a more important role for both first-time buyers and “mover uppers.” Canadian real estate has become so unaffordable that now a third of first-time homebuyers require a six-figure gift from their parents—up considerably from just a few years ago.
A Third of Canadian First-Time Home Buyers Require Parental Wealth
Canadian first-time buyers require a little, okay—a lot of help from friends and family. Nearly a third (31%) of first-time buyers needed a gift to help buy a home in the bank’s 2024 YTD data. That’s up from 20% back in 2015, which seemed high back then. The average gift this year was a whopping $115,000, up 73% since 2019. One would expect the amount of the gift to increase, but the amount as well as the share of buyers requiring parental help? That’s a compounding problem that becomes much harder to fix.
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Even Canadians Upgrading Their Home Need Parental Help
Relying on parental wealth to secure a home isn’t just the domain of first-time buyers. CIBC found that those upgrading their homes increasingly rely on parental wealth, too. The share of homebuyers upgrading their home with a parental gift climbed to 12% of purchases in 2024. That’s up 3 points from 2015, and as you might have guessed—those gifts got a lot larger, too. The average gift reached $167k, rising 97% since 2019.
Homebuyers in BC & Ontario Need A Lot More Help
First-time buyers in BC and Ontario were even more dependent in these pricey provinces. The share that used a gift was roughly 36% in both provinces, 5 points higher than national data. The average gift’s dollar value was also significantly more expensive in BC ($204k) and Ontario ($128k). As one might guess, those purchasing an upgrade also required a hefty gift. The share of buyers upgrading with a gift was roughly the same as the national rate in both provinces. However, the average gift was significantly higher in both BC ($230k) and Ontario ($189k).
The Broader Implications
“Homebuyers relying on a wealth transfer from their parents in order to purchase a home is becoming the norm in Canada,” explained Benjamin Tal, deputy chief economist at CIBC World Markets and the co-author of the report. He adds, “… this phenomenon is helping to mitigate the bite of housing inflation for buyers, but unfortunately, it is also contributing to a widening of the already wide wealth gap in Canada.” It may just be a sign of the times, even the country’s finance minister required parental help to purchase their home, but it’s a problematic shift for young adults. Homeownership is the largest source of Middle Class wealth in the country, and it’s increasingly determined by parental wealth. Since most immigrants are looking for class mobility, it’s a big shift to the country’s value proposition. Moving to Canada will be increasingly seen as a lateral shift if this continues while developing economies become advanced ones.
A Strategic Solution for First-Time Homebuyers
First-time homebuyers might consider investing in multifamily rental apartments through a Real Estate Investment Trust (REIT) for as little as $3,508 instead of relying solely on traditional investment portfolios or bank accounts to save for a down payment. This strategy can provide a steady income stream while potentially appreciating in value. The demand for rental properties is increasing due to immigration and demographic shifts, making multifamily rental apartments a promising investment.
Additionally, renting instead of buying a home while saving for a sizable down payment can be a wise move. Participating in the thriving real estate market through rental income allows first-time homebuyers to avoid committing to owning a home that might decline in value. Many homeowners face mortgage resets from low rates taken out in 2019 and 2020, which are now set to come due at significantly higher rates. This strategy helps first-time homebuyers benefit from real estate investments without the risks associated with homeownership in a volatile market.
In these turbulent times, it's crucial to ensure that your portfolio is well-positioned to withstand potential economic challenges and market fluctuations. Consider incorporating gold and multifamily rental apartments to fortify your investments and better navigate the complexities of the current financial landscape.
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. Combining gold with investments in private real estate, such as multifamily rental apartments, can 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.
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.
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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, providing 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 Roger 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 management firm.
Watch The Great Taking Documentary
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Adrian C. Spitters FCSI?, CFP?, CEA? President, Author, Private Wealth Advisor
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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