Statistics Canada on Wednesday said Canadians are about to witness one of the biggest wealth transfers in history, according to Blacklock’s Reporter.
Gifts and inheritances from homeowners to their children will create a “looming wave of interfamilial wealth transfer,” wrote analysts.
“Canadians born in the 1990s whose parents were homeowners were twice as likely to own a home in 2021 than those whose parents were not homeowners,” said a StatsCan report.
A third of homeowners under 35 had help from parents with benefits averaging $85,000.
“A looming wave of interfamilial wealth transfer is set to occur as baby boomers age, putting those with familial means in a more secure financial situation than those without,” said the report on familial support in entering the housing market.
“A wealth transfer in the form of inheritance whether from a living or deceased relative is just one way many homeowners have benefited from familial support.”
“Owning a home remains a critical source of wealth accumulation for many Canadian families with real estate equity representing 42% of overall household wealth.”
Paid-up equity in homes nationwide is estimated at $3 trillion.
“As housing affordability deteriorated the barriers to home ownership have become increasingly prohibitive particularly for those without familial support,” wrote analysts.
The report followed 2024 Bank of Canada research that also confirmed home ownership had become a multigenerational benefit for families that paid down mortgages to help their children.
“Parental co-signing among first time homebuyers has increased over time along with house prices, rising from 4% in 2004 to 13% in 2022,” said the bank’s study on housing affordability and parental income support.
“With parent co-signed mortgages, adult children on average enter the market at a young age with lower credit scores.”
“How important are parents on co-signed mortgages? Our model shows parental support allows adult children to obtain more housing while still satisfying the regulatory borrowing constraints.”
The Bank estimated 74% of adult children with co-signed home loans wouldn’t otherwise qualify for a mortgage.
“House prices have more than quadrupled since 2000 with debt levels rising to over 180 percent of disposable income. As a result, entering the housing market is out of reach for many younger households.”
“For example in Vancouver a borrower must have $212,800 in annual income to qualify for a mortgage on an average house while the median household income in Vancouver is just $83,600.”
