If I didn’t have help [financière] of my parents, it would not be possible [de devenir propriétaire] In the coming years
, says Marianne bluntly in an interview with Radio-Canada. For personal reasons, the young woman did not want her surname to be made public.
Actively looking for a property for nearly two years, the young woman received a mortgage pre-approval of $285,000, but maintains that few residences suit her budget and her needs on the Quebec market.
The strong desire for home ownership among young adults has been dampened by the continued rise in house prices in Quebec and the dramatic rise in mortgage interest rates over the past year.
For the first time in several months, the Bank of Canada is keeping its key rate unchanged. (File photo)
Photo: The Canadian Press/Sean Kilpatrick
For the moment, the young woman pays $1,200 a month to live in an apartment in Quebec, an amount she will not see again
and that she would be ready to pay for a mortgage
.
His parents, a couple who benefit from guaranteed income for their pensions, say they can afford
to help Marianne and her older brother. The latter was able to benefit from a cash donation when he became the owner a few years ago.
Anyway, everything we have is going to come back to them when we leave, so I might as well give it away today.
mentions Marianne’s mother. We prefer to transmit in our lifetime
adds his father.
Financial aid, a must?
In 2021, more than 20% of Quebec buyers were able to count on a financial boost from their parents to buy their first property, according to a report by CIBC Capital Markets.
If little evidence exists on this subject, the phenomenon is perceptible in the offices of financial institutions, assures for his part Émile Khayat, senior regional director for TD Wealth Management.
This is a trend that was already taking place in the other provinces and it is intensifying in Quebec. More and more money is transferred from one generation to another to help the youngest.
In Ontario, for example, 40% of parents whose children aged 18 to 38 recently became first-time homeowners supported them financially, according to a survey by theOntario Real Estate Association made in 2022.
Helping your child become a homeowner: report by Alexandra Duval
ICI PREMIÈRE SHOW • It concerns us
This trend, which is accelerating in Quebec, could well become unavoidable in a context where it is very difficult
to buy a residence without external financial assistance, confirms Paul Cardinal, economist at the Association of Construction and Housing Professionals of Quebec (APCHQ).
Affordability is at its worst level in three decades in Quebec. We haven’t seen such a high rate of effort to be able to buy a property since the mid-1990s.
The proportion of people who buy a property with a family member is also becoming more important. In Canada, 6% of buyers find themselves in this situation.
Generation gap
Between 1996 and today, the price of houses in Quebec has multiplied by 2.5, says Mr. Cardinal, who believes that the younger generation suffers from intergenerational inequity.
Young people will find it very difficult to buy, whereas their parents succeeded easily even though they were in the middle class. Today, you have to have a higher income or help from your parents.
Added to the uncertain economic context is the difficulty of qualifying for a mortgage loan, a step called resistance test
. The buyer must qualify at the Bank of Canada’s prime rate plus 2% or the contract rate plus 2%, a way to ensure that the borrower can withstand any rate increases.
It was a good move when interest rates were lower, but now that they’re rising to a cyclical high, it’s penalizing buyers who want to qualify.
nuance Paul Cardinal.
What solutions?
Few solutions are available to young buyers, except to count on the help of their parents. Economist Paul Cardinal believes that the Canada Mortgage and Housing Corporation (CMHC) will have no choice but to show more flexibility in allowing a 30-year amortization period rather than 25 to breathe new life into new buyers.
years is allowed for loans with down payments of more than 20%, but not those of 5% that must be accompanied by mortgage loan insurance. However, it is the first buyers who have less funds who would need a longer period of amortization”,”text”:”What I find a little absurd is that amortization over 30 years is authorized for loans with down payments of more than 20%, but not those of 5% which must be accompanied by mortgage loan insurance. Yet it is the first time buyers who have less funds that would need a longer amortization period””>What I find a little outlandish is that 30-year amortization is allowed for loans with down payments of more than 20%, but not those of 5% which must be accompanied by mortgage loan insurance . Yet it is the first time buyers who have less funds that would need a longer amortization period.
he pleads.
Many future buyers could also get away with the new Tax-Free Savings Account for the purchase of a first home (TFSAP), introduced at the beginning of the year. A tool that could become more interesting in the long term than the home buyers’ plan (RAP), created in the 1980s in Canada.
We should go one step further by establishing a CELIAPP intergenerational fund that would allow parents to contribute to the CELIAPP of their child while benefiting from a tax deduction.
Another solution would be to reimburse the transfer costs — or welcome tax
— for first-time buyers, a mechanism put in place in Ontario.
In the meantime, can new buyers expect to buy at a better price and rate in the near future?
I can’t tell them to wait 1 year, 2 years, 5 years. We are in a situation where affordability will not improve much
concedes Paul Cardinal. Interest rates are at an all time high, or so we hope.
With information from Alexandra Duval
2023-09-07 18:21:12
#offspring #buy #home #ROI
