Parents buying property for young children to secure a future foothold in Canada
Prices for some single-family homes in West Vancouver have risen by several million dollars in just a few months
The bank of mom and dad has skipped a generation, with parents now buying houses or condos for their school-aged children or grandchildren. Nervous upper-middle-class homeowners are hoping that the strategy will help younger generations gain a foothold in Vancouver.
“At the rate things are going people are afraid,” said Kristine Skinner, a financial adviser with North Vancouver-based credit union BlueShore Financial, referring to recent rapid price gains in residential real estate.
“I have people coming to me, saying, ‘Are my children or my grandchildren going to be able to afford a home when they’re an adult?’” Skinner said. “They’re actually buying revenue properties today with the intent that the values will appreciate and those properties will be transferred to their children as adults.”
According to a 2015 survey by private mortgage insurer Genworth Canada, 40 per cent of first-time homebuyers in Vancouver had help from their parents, compared to 22 per cent in the rest of Canada.
Skinner said it’s common for her clients to help their adult children with either a gift or a loan of between US$200,000 to US$500,000 to help with buying a home, often in the same neighbourhood.
Single-family homes in West Vancouver have seen rapid price appreciations over the past year and some values have risen by several million dollars in just a few months. Jason Soprovich, a realtor with Royal LePage who specialises in high-end West Vancouver properties, said he sees homeowners downsizing and then setting aside some of the money from the sale of the home for their children. Families are often motivated to help the children live near the parents, and Soprovich said new condo buildings in the Lower Lonsdale area of North Vancouver have been a popular property choice for parents helping children to get into the market.