A recent study conducted by Statistics Canada reveals a significant correlation between parental homeownership and millennial homeownership rates. The research indicates that millennials whose parents own a home are nearly twice as likely to own one themselves, and this likelihood more than triples if their parents own multiple properties.
Purchasing a home has become increasingly challenging for Canadians, with the average home price exceeding $700,000 and borrowing costs reaching a ten-year high. In cities like Toronto and Vancouver, where the typical home sells for over $1 million, prospective buyers must secure a down payment of at least $200,000 or 20% of the property’s purchase price.
Statistics Canada’s study, which analyzed tax filings and ownership data from the Canadian Housing Statistics Program, demonstrates the advantage afforded to individuals born to parents who already own real estate. The research reveals that millennials born in the 1990s, currently aged between 24 and 33, had a homeownership rate of 8.1% in 2021 if their parents did not own property. However, this rate increased to 14.7% if their parents owned one home, 22% if their parents owned two properties, and 27.8% for parents who owned three or more properties.
The same trend persisted across income levels and among those aged 29 to 30 in 2021. The researchers behind the study, Michael Mirdamadi and Aisha Khalid, noted that “inequality of homeownership appears to be reproduced across generations as parents’ property ownership conveys significant financial advantages to their children.”
It is worth highlighting that homeownership rates were particularly affected by parental homeownership status for individuals earning less than $40,000 per year. In this income bracket, the homeownership rate was 8.5% if their parents were renters and 15.3% if their parents owned one home. Similarly, for those earning between $40,000 and $80,000, the homeownership rates were 21% for children of renters and 32.6% for children of homeowners. Higher earners, with an annual income exceeding $80,000, had homeownership rates of 45.5% for children of renters and 53.6% for children of parents who owned one home.
Furthermore, the study discovered a significant difference between the average income of homeowners and renters. The average annual income of homeowners was $65,000, while non-homeowners had an average income of $36,000.
The findings underscore the concerning impact of parental homeownership on the ability of millennials to access the housing market. Housing inequality between generations persists, highlighting the need for policy interventions and programs focused on leveling the playing field for aspiring homeowners from economically disadvantaged backgrounds.
Frequently Asked Questions (FAQ)
1. How does parental homeownership influence millennial homeownership rates?
Statistics Canada’s research reveals that millennials whose parents own a home are nearly twice as likely to own a home themselves, and this likelihood more than triples if their parents own multiple properties.
2. What are the challenges faced by Canadians in buying their first property?
Canadians face challenges such as high home prices, with the average price exceeding $700,000, and borrowing costs at a ten-year high. In cities like Toronto and Vancouver, where the typical home sells for over $1 million, buyers must have a substantial down payment of at least $200,000 or 20% of the property’s purchase price.
3. How were the findings of the study obtained?
The study utilized tax filings and ownership data from Statistics Canada’s Canadian Housing Statistics Program to analyze the correlation between parental homeownership and millennial homeownership rates.
4. What did the researchers conclude from the study?
The researchers concluded that there is a significant correlation between parental homeownership and millennial homeownership rates, indicating that parents’ property ownership conveys significant financial advantages to their children.
5. How does income level impact the influence of parental homeownership on millennial homeownership?
The study found that parental homeownership status has a greater influence on millennial homeownership rates for individuals with lower incomes. Those earning less than $40,000 per year had lower homeownership rates if their parents were renters compared to if their parents owned a home. However, even among higher earners, the influence of parental homeownership was still apparent.