Thu. Dec 7th, 2023
    The Influence of Parental Homeownership on the Homeownership Rates of the Younger Generation

    A recent analysis conducted by Statistics Canada reveals a significant correlation between parental homeownership and the likelihood of their adult children owning a home. The study, which focused on individuals born in the 1990s, found that those with parents who owned a home were twice as likely to own a home themselves compared to those without a generational stake in the housing market.

    According to StatCan’s report, the overall homeownership rate for Canadians born in the 1990s was 15.5 percent. However, this rate varied significantly depending on whether their parents owned a home. For adult children of non-homeowners, the homeownership rate stood at 8.1 percent as of 2021. In contrast, those whose parents were homeowners had an ownership rate of 17.4 percent. The odds of children owning a home increased even further if their parents owned multiple properties, reaching 23.1 percent.

    While the report did not directly consider the role of financial gifts in helping adult children purchase homes, it referenced other studies that emphasize the growing significance of intergenerational wealth transfer in funding home purchases.

    The influence of parental homeownership on the homeownership rates of the younger generation was particularly pronounced in Ontario and British Columbia, Canada’s most expensive housing markets. Given the higher property values and income requirements associated with these markets, the report suggests that parents’ property ownership or wealth plays a larger role in their adult children’s ability to become homeowners.

    The findings of this analysis underscore the ongoing debate surrounding home affordability and the impact of parental wealth on the younger generation’s ability to enter the housing market. As Canadians grapple with rising living costs, initiatives such as tax-free accounts to save for a first home and efforts to increase the housing supply have been introduced by the government to address affordability concerns.

    FAQ:

    Q: How does parental homeownership influence the likelihood of adult children owning a home?
    A: Statistics Canada’s analysis indicates that adult children with parents who own a home are twice as likely to own a home themselves compared to those without homeownership in the family.

    Q: Did the report consider the role of financial gifts in purchasing homes?
    A: The report did not directly consider the role of financial gifts but referenced other studies highlighting the importance of intergenerational wealth transfer in funding home purchases.

    Q: In which provinces did parental homeownership have the greatest impact?
    A: The influence of parental homeownership on adult children’s homeownership rates was most significant in Ontario and British Columbia, which have high property values and income requirements.

    Q: What initiatives have been introduced to address home affordability concerns?
    A: The Canadian government has implemented measures such as tax-free accounts for saving to purchase a first home and efforts to increase the available housing supply. These aim to alleviate concerns about home affordability.