For generations, there was a formula for life that worked like clockwork. With very few variations, the advice was always to go to school, get a good job, and then buy a house. However, things have changed drastically in the last decade.

Many people in the up-and-coming generations have followed this advice to the letter, but are increasingly finding themselves priced out of the market. Real estate prices in the GTA and Halton are high enough. Add high interest, and the dream of owning a house seems out of reach for many first-time buyers.

One of the best solutions is to start planning for that purchase well in advance, possibly even years before entering the market. As parents or grandparents, this can mean offering a helping hand while the children are still young. Let’s explore some ideas that will help those in the next generations enjoy a life of financial stability through real estate.

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The First Step of the Property Ladder

Buying that first house isn’t just an exciting milestone in life. It sets the foundation for financial security that can last for generations. It’s also your first foot on what real estate professionals refer to as the property ladder. Simply put, each home you buy moves you up another rung of the ladder. Look at it this way:

A mortgage can be paid off fully at some point, which could, in turn, allow a homeowner to retire in comfort. It’s far different from renting, where that money is gone forever, making it challenging to save for the future. That’s why getting your first foot on the ladder is so important. 

As your mortgage gets smaller, your equity grows, and more options become available. For example, you may decide to move higher up on the ladder by acquiring an investment property in addition to your primary residence.

At the top of the ladder, you own multiple properties, and your net worth grows substantially. This financial success can begin with owning your first home, no matter how small or humble it may be. 

Do you want to know more about buying a house to live in or as an investment? The posts below will give you some valuable insight:

Real Estate as an Investment

Unlike other investments, your house is a tangible asset that you can see and touch. Though its value on paper can fluctuate over the years, you never have to worry about it disappearing altogether. And if you look back at the history of real estate, housing values have always risen over the long term.

Contrast that with buying into the stock market, where you could lose everything if the company goes out of business. A house will never not be valuable. First off, it’s your shelter, your place of safety and refuge where you build a lifetime of memories with your family and friends. 

Secondly, it’s a source of financial security that can protect you from difficult economic times and inflation. As an asset that holds and increases in value, buying a home is often a smart investment. Every time real estate values rise, your equity and buying power also increase. 

The Advantages of Buying Early

The longer you hold onto your asset, the more generational wealth you build. If you keep the home in the family, you provide your loved ones a distinct advantage as they begin their own adventures.

While no investment is foolproof, real estate almost always pays off when you’re in it for the long term. Consider how much the average price of a house in the GTA has risen over the years. 

  • In 2010, you could buy a house in Toronto for approximately $409,058, according to TRREB (Toronto Regional Real Estate Board.)
  • By 2015, those values increased to $552,575. That’s an increase of over $140,00 in just five years.
  • In 2020, housing values soared again, rising to 839,363.
  • By the middle of 2023, the average price was hovering at $1,182,120.

These rising values clearly demonstrate the value and importance of buying a home as soon as it becomes feasible. The earlier you buy, the more your family will benefit in the future. Later on, you can sell the house and enjoy the profits or keep it in the family to create generational wealth.

There are many reasons to love living in Oakville and Halton! Learn more in the posts below:

What to Do Right Now

Some well-off homeowners are taking drastic measures to help their children and grandchildren, often by buying or gifting them a home. However, you don’t have to be wealthy to give your loved ones a head start in life. There are numerous smaller ways to help your child in the future, starting right now.

  • Encourage healthy saving habits in your loved ones from an early age.
  • Open a FHSA (First Home Savings Account) when your child turns 18. This allows them to save up to $40,000 tax-free over the next 15 years. These savings, along with any yields, can help cover the down payment on their first house.
  • Gift all or part of a down payment. The down payment is often the most challenging part of the purchase. Anything you can give, big or small, will be a significant boost when the time arrives.
  • Co-purchase a house. With your name on the title, your finances are protected, and your equity will grow as the house increases in value. This can be a great win-win for you both.
  • Allow your family members to purchase a portion of your existing family home.

These are just a few of the creative solutions available to you that can pay off substantially for your family now and in the long term. When you’re ready, a local real estate agent can open the doors to even more possibilities for the future.

Do you have questions about buying or selling in Halton or the GTA? Feel free to put my 20 years of real estate experience to work for you. Reach out to 416-884-7925 or email damir@damirstrk.com for more information.