The Bank of Mom And Dad to the Rescue
Canadians are doing whatever it takes to enter the housing market, even if it means buying with the folks.
According to a new study from the Statistics Canada titled “Intergenerational Housing Outcomes in Canada, Parents and Co-ownership“, Canadians are relying on their parents more than ever to secure a mortgage.
This was the second study in a series from Statistics Canada which attempted to shine the light on how parental wealth shapes homeownership rates in Canada.
The First Study, From 2021, Found That Adult Children Were Twice as Likely to Own a Home if Their Parents Were Homeowners
As an extension to the first study, this study attempts to determine how, exactly, this this phenomenon of generation wealth transfer is occurring.
Ultimately, what it uncovered that young adults were increasingly entering into co-ownership arrangements with their parents, or with other adults, in order to be able to enter the housing market.
In fact, the study found that a whopping 60% of young adults now have a co-ownership agreement of some kind.
20% of Young Adults’ Property Purchases in Ontario and BC are With Parents
The study highlights also that Ontario and BC had the highest rate of co-ownership with parents, at 20 percent and 20.5 percent, respectively.
Drilling down to the local level, we find that the rate of young adults engaged in a parent-child property co ownership is the highest in Toronto and Vancouver, at 27% and 24%, respectively.
The correlation between parent-child ownership and increasing median real-estate price is almost perfectly linear, suggesting that parental money is increasingly required as young Canadians attempt to get into Canada’s top markets.
Immigrant Parents Far More Likely to be Engaged in Co-Ownership with Their Children
The study found that immigrants tended to co-own properties with their children at a higher rate than do Canadian born citizens; in fact in the GTA in 2021, 80.9% of co-owning parents were immigrants.
Wealth Inequality in Real-estate Increasing
The study concluded that higher parental wealth and higher parental homeownership translated to higher housing value for adult children.
In Ontario, the study found that a young adult’s home was now worth an average of 31.2% more if their parent happened own a home in the top tercile of value — this is regardless of whether or not their parents co-owned the home with them.
This suggests that young Canadians are leaning more heavily on their parents than ever before.
This further aligns with CIBC study that found that over 30% of Canadians are now borrowing from the bank of Mom and Dad in order to secure that first home.
This raises a troubling question: what happens to Canadians who dont have access to parental wealth?
