The bank of mom and dad is proving resilient for Metro Vancouver homebuyers.
Among the 30% of first-time homebuyers in Canada to get help from their folks on a down payment, local parents have been gifting $180,000 on average over the past year, according to a CIBC report released Monday.
That is by far the highest amount across Canada, where the average among the 30% sits at $82,000.
It also far exceeds the next closest market, with Toronto parents offering $130,000 on average.
And it’s not just first-time homebuyers in Vancouver getting significant help.
The CIBC report found that the mover-uppers who received help — just under 9% of Canadians — got $340,000 from their parents in Vancouver on average.
“How do parents come up with this money?” report author and CIBC deputy chief economist Benjamin Tal asked in his report.
“The narrative is that many of them get themselves into debt to support their kids. The evidence, however, questions that assertion. Based on Equifax information, we estimate that only 5.5% of gifting parents use debt to finance gifting.”
He concluded a large portion of the gifting appears to be coming from parents’ savings.
With savings growing during the course of the pandemic, Tal said that has allowed for an increase in the size of an average gift.
In 2015, the average size of such gifting stood at $52,000 across Canada on average compared with $82,000 in 2021.
“In fact, over the past half a decade, growth in the average size of gift outpaced home price inflation, averaging 9.7% per year—a full two percentage points faster than growth in home prices,” Tal said in his report.
He estimated the gifting of such generational wealth amounted to $10 billion over the past year — about 10% of total down payments in the Canadian market.
“Given the trend and the size of gifting, it is clear that this phenomenon is becoming an important factor impacting housing demand and therefore home prices in Canada,” Tal said in the report said.
“As for the impact of wealth inequality, clearly gifting acts to narrow somewhat the wealth gap between gifting and non-gifting parents. At the same time however, gifting clearly works to widen the wealth gap between receivers and non-receivers.”
