British Columbia leads all Canadian provinces and territories in co-ownership arrangements for residential properties between parents and their young adult children, according to a new report from Statistics Canada.
The report found 20.3 per cent of the B.C. residents born after 1989 (adult children) who own a property had a co-ownership arrangement with their parents, as compared to 17.3 per cent for all of Canada.
Furthermore, parents who are immigrants co-own properties more frequently with their adult children than Canadian-born parents; in Vancouver, 76.9 per cent of parents who co-owned properties were immigrants.
Overall, co-ownership rates rise in urban centres, where immigrants tend to settle. For example, the rate in Vancouver is 23.4 per cent; in Victoria it is 23.7 per cent and in Kelowna it is 21.2 per cent.
Home purchase prices far exceed adult child's income
The study also turned its attention to the value of co-owned properties and the “strong positive correlation” to the parents’ home equity, or “housing wealth.”
Overall, the value of co-purchased properties rose alongside the housing wealth of the parents. This was most pronounced in urban regions, especially Vancouver and Toronto. And, in most regions the adult children’s property value was positively related to their incomes.
However, an analysis of urban B.C. regions “produced distinctive results,” as property values of children in the lowest income range were comparable with those of the highest income range.
A statistical analysis of the arrangements also found that a “large proportion” of adult children had low incomes while owning highly valued properties, especially in Vancouver and Toronto.
In Vancouver, 14.6 per cent of such arrangements saw a ratio of assessed home value to total income of the adult child over 30 (the home’s value is at least 30 times that of income). This analysis did not count adult child owners who did not report any income or negative income.
Of these “high-ratio” properties in Vancouver, 65.4 per cent were owned by at least one first-generation immigrant adult child, who otherwise accounted for 37.3 per cent of all properties owned by adult children.
As for how this phenomenon occurs, the study noted previous research by Statistics Canada asserting immigrants “were more likely to devote greater proportions of wealth or spending to home ownership relative to other investments.”
And, the arrangements unveiled in the analysis, “do not reflect other forms of liquid assets, such as cash savings and disposable assets, that can be drawn upon to support the purchase of residential real estate.”
And so, the results “may be explained in part by higher levels of disposable assets for immigrant families, including savings held abroad.”
This new study is said to piggyback off a November 2023 finding that young adults (born after 1989) whose parents were homeowners were twice as likely to own a home in 2021 than those whose parents were non-homeowners. It also noted a CIBC study showing that between 2015 and 2021 the share of first-time homebuyers who received a “financial gift” from family rose from 20 per cent to 28 per cent.
Novel data 'not too surprising'
Urban planner Andy Yan, director of the City Program at Simon Fraser University, summarized the study’s results as “not too surprising.”
“The overall meaning is, you need wealth to own a home. The days of working your way into home ownership are stretched,” said Yan, who has studied the positive relationship of foreign money distorting B.C.’s real estate market to help “decouple” home prices from local incomes.
Yan said for those non-immigrant parents who bought homes on local incomes decades ago, passing money down to children by co-purchasing properties allows the adult children to compete for homes.
“But for those without access (to wealth), it puts them at a certain position where they’re competing with that same population,” said Yan, adding,“the larger issue is social mobility; meaning can you do better than your parents?”
Yan is mindful that housing and immigration policies have been enacted to allow for these conditions to take root.
“Of course, we’ve had immigration policies based on wealth.”
Yan was also mindful of the novel analysis of the study, noting we do not have comparative data.
“Is this something new or something longstanding? So, one has to be a little careful. The bigger accomplishment is we have started to do this kind of analysis; looking at the deeper aspects of home ownership in Canada.”
