Hoping to buy your first home? It's getting harder to qualify without help from mom and dad

Help from parents is increasingly becoming a deciding factor in who is able to realize their dream of owning a home and who is not.

A report from Statistics Canada released last month found that as of the 2021 reference year — the latest available from the Canadian Housing Statistics Program — around one in six properties owned by buyers born in the 1990s were actually co-owned with their parents.

Since this was the first Statistics Canada release on this topic, it's not known how this rate of co-ownership compares to earlier times, a spokesperson said.

However, the report also cited CIBC data from 2021 that found almost 30 per cent of first-time home buyers that year received financial help from family, compared to 20 per cent in 2015.

An earlier StatsCan report also found that, as of 2021, adult children ages 22 to 31 were twice as likely to become homeowners themselves if their parents own property.

None of this is a surprise to Paul Kershaw. He's a professor at the University of British Columbia's School of Population and Public Health and founder of think tank and advocacy organization Generation Squeeze, which explores fairness between the generations — including in the housing market. 

"So when my mom started out in the housing market in the mid 1970s, it would have taken five years of full-time work for a typical young adult to save a 20 per cent down payment on an average price home," Kershaw told Cost of Living. "If you flash forward to today, it's 17 years on average, 22 in B.C. and Ontario."

As a result, those who can "are turning to the members in their family for whom rising home prices haven't been a hardship — they've been a boon," said Kershaw, who holds an interdisciplinary Ph.D in political science, law and economics.

This reality leaves out a wide swath of young, would-be homeowners who don't have access to family money or credit, and also raises questions about risk for the older generations who want to help their kids but also support themselves through what may be many years of retirement. 

Christian Kang, 29, counts himself lucky for being able to get support from his father to buy a condo a little more than a year ago. Even though he has a decent paying job in finance, and had saved for quite a few years while living at home, he could still only qualify for a mortgage of around $400,000 — not enough to get a place in Toronto.

Kang said when banks were hiking rates, "it was getting harder to qualify." 

"I thought I'd have a good amount for a larger mortgage, but it just turned out not to be the case," he said. "I had felt like I may be trapped renting forever."

But then he was given some money when his grandmother passed, and an offer of some additional assistance from his parents, who supplied the rest of the financing through their line of credit.

That got him to the $680,000 he needed for his one-bedroom plus den, single-bath condo in midtown Toronto.