Millennials are nearly twice as likely to own a home if their parents are homeowners and three times more likely if their parents own multiple properties, according to new research from Statistics Canada.
With the price of a home across the country more than $700,000 and borrowing costs the highest in a decade, it has become increasingly difficult for Canadians to buy their first property. In Toronto and Vancouver where the typical home sells for more than $1-million, it is even more difficult because buyers must have a down payment of at least $200,000 or 20 per cent of the property’s purchase price.
But being born to parents who already own real estate gives the buyer a huge advantage, according to the research, which uses tax filings and ownership data from Statscan’s Canadian Housing Statistics Program.
The report found that those born in the 1990s, currently between the ages of 24 and 33, had a home ownership rate of 8.1 per cent in 2021 if their parents did not own property. That rate increased to 14.7 per cent if their parents owned one home. It was 22 per cent if their parents owned two properties and 27.8 per cent for three or more properties.
The trend was similar when researchers looked at various levels of income and those who were between the ages of 29 to 30 in the year 2021.
“Inequality of homeownership appears to be reproduced across generations as parents’ property ownership conveys significant financial advantages to their children,” the researchers Michael Mirdamadi and Aisha Khalid said in the report released on Monday.
For the older millennials, their home ownership rate was 15.7 per cent in 2021 if their parents were renters and 28.5 per cent if their parents owned one property.
For those who earned less than $40,000 a year, a parent’s home ownership status appeared to have a greater influence on whether their child would own property. Those in that income bracket had a home ownership rate of 8.5 per cent if their parents were renters and 15.3 per cent if their parents owned one home.
For those who earned between $40,000 and $80,000, the child of a renter had an ownership rate of 21 per cent compared with 32.6 per cent for a homeowner. And for those earning more than $80,000, it was 45.5 per cent for the child of renters and 53.6 per cent for those who had parents who owned one home.
The researchers also found that there was “significant difference” between the average income of those who were homeowners and those who were renters. Those who were homeowners had an average annual income of $65,000 and those who did not own had an average income of $36,000.