Adult children of homeowners are significantly more likely to be homeowners themselves, StatCan says
The already-working children of homeowners are significantly more likely to own their own homes compared to the offspring of non-homeowners, according to a new analysis by Statistics Canada.
The major driver of the phenomenon was what StatCan described as “the Great Wealth Transfer.”
“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,” StatCan said in its recent report outlining the manifold advantages of parental property.
As of 2021, the rate of homeownership was 17.4% for the adult children of homeowners, while the rate was 8.1% for the adult children of non-homeowners.
More parental properties were also found to have a compounding effect: adult children of multiple-property owners were nearly three times more likely to be homeowners (23.8%) than the adult children of non-homeowners.
“Financial assistance from parents is one of the channels that can explain differences in homeownership between the adult children of homeowners and those of non-homeowners,” StatCan said. “Other possible channels include better access to certain social networks and greater investments in education, which may lead to higher individual incomes for adult children of homeowners.”
A majority of Canadians remain sceptical about their prospects of entering into home ownership despite the noticeable decline in home prices over the past year, according to a new Ipsos poll conducted for Global News.https://t.co/Fp8HA7rnBW— Canadian Mortgage Professional Magazine (@CMPmagazine) April 7, 2023
Where are the most likely hubs of substantial inter-generational wealth transfer?
Quebec and Ontario have the largest share of older Canadians (60% and 52%, respectively) who are in a sufficiently robust financial position to leave inheritances for their next generations, according to a recent Angus Reid survey commissioned by Canadian Western Bank.
Canadians aged 55 and above were also more likely (72%) to say that they will be bequeathing wealth to their descendants. Overall, 52% of Canadians said that they have the resources to leave an inheritance.
However, only 44% of Canadians aged 35 to 54 said that they have made the necessary preparations to leave an inheritance.
“Inheritance planning might be left too late in the lives of Canadians, particularly the younger generation,” CWB said. “This identifies the importance for Canadians to start their inheritance planning (in all its forms) – including proper financial management to reduce burdens on inheritors – earlier.”