"Bank of Mom and Dad": Young Canadians much more likely to own a home if their parents do
Are your parents homeowners? If so, then that means you’re much more likely to own a home compared to young Canadians with parents who aren’t homeowners, according to a new report.
Statistics Canada released a study on Tuesday analyzing how “parental property ownership could increase the likelihood of homeownership for their adult children.”
The report found that in 2021, the adult children (millennial and Generation Z tax filers born in the 1990s) of homeowners were twice as likely to own a home as those of non-homeowners.
Among #millennial and #GenZ tax filers born in the 1990s, the children of homeowners were twice as likely to own a home in 2021 than the children of non-homeowners. https://t.co/ZnV0FJgiUo
#CdnHousingStats #CdnHousing pic.twitter.com/836TB050cE
— Statistics Canada (@StatCan_eng) November 20, 2023
The rate of homeownership was 17.4% for young Canadians with parents who own a home. Meanwhile, the rate of homeownership for adult children of non-homeowners was 8.1%.
Moreover, adult children whose parents owned multiple properties were nearly three times more likely to be homeowners in 2021.
StatsCan says there are multiple factors that contribute to younger Canadians’ ability to own a home, including what some refer to as the “Great Wealth Transfer.”
“This concept proposes that parents’ wealth could—through gifts and inheritances—make it easier for their adult children to afford a down payment or to meet their mortgage payments,” reads the report.
Essentially, it’s like nepo babies, but for homeownership.
It’s no surprise that Canadians need to tap into the “Bank of Mom and Dad,” as StatsCan described it.
A recent report from ratehub.ca shows that you need to earn hundreds of thousands of dollars in order to buy a house in Canada.
The StatsCan study also found that homeownership was even more likely for young Canadians with individual incomes of $80,000 or more. The rate of homeownership for adult children of parents who own a home in this tax bracket was 56.4%, around one-fifth higher than that for those of non-homeowners (46.2%).
Adult children of homeowners who earned $80,000 or less had a rate of 27.4%, which is still two times higher than that for adult children of non-homeowners (14.8%).
According to the report, young Canadians’ homeownership might also depend on location. Among all provinces, the rate of homeownership for people born in the 1990s is lowest in British Columbia.
Across Canada, considering age, income and province of residence, StatsCan found that parents’ property ownership is strongly associated with an increased likelihood of homeownership for their adult children.
“Parents’ property ownership remained positively associated with their adult children’s likelihood of homeownership when holding the adult children’s income, age and province of residence constant,” reads the report.
“Together, these results reveal a link between parents’ housing wealth and their children’s homeownership outcomes.”
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