Wealth transfer pushing up demand on tight housing supply

The price of real estate continues to climb, and many Baby Boomers are supporting their children with funds to start their homeownership journey.

In a recent episode on TRREB’s Ready to Real Estate podcast, we unpacked generational wealth transfer and how it relates to the housing market; it’s an ongoing trend of wealth passed down from one generation to another.

Generational wealth transfer

When it comes to how this impacts real estate, we learned that early inheritances are changing how new buyers are cascading into the homeownership world. More first-time buyers are looking towards their parents for help with the house hunt, especially with upward pressure on prices and stricter mortgage lending rules, including the stress test.

However, gifted funds are supporting down payments and driving up demand in the GTA. In fact, consumer polling conducted by Ipsos for TRREB suggested that about 40 per cent of buyers in 2021 would be first-timers. This means many first-time buyers might reap the benefits of a generational wealth transfer, and in turn increase demand on the already tight supply of homes available for sale.

Coordinated effort

This is why it’s important to address housing supply. We know demand will remain strong in the GTA as the population continues to grow, perhaps at a record pace in the initial years of recovery from the pandemic. Policymakers at all levels must pursue a coordinated effort to bring on a greater diversity of supply in major metropolitan areas. Otherwise, the journey to buying a home will get harder and pricier for many buyers. The only long-term solution to affordability is to build more homes to accommodate the needs of our growing region. An affordable housing supply will also be important to sustain the economic competitiveness of the GTA on a global scale.

I invite you to tune into TRREB’s Ready to Real Estate podcast to uncover more topics such as generational wealth transfer. In our newest season, we’ll feature fascinating interviews and thought-provoking viewpoints on the latest real estate trends, critical issues facing today’s marketplace, and the industry as a whole.

Discover more homeownership trends by visiting trreb.ca and explore the latest reports. You can also connect with a TRREB member realtor and search listings in real time on any device.