Bank of Mom and Dad helping young adults enter London housing market

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Parents seem to be playing a bigger role in their children’s chances of entering the housing market, with one in six homes owned locally by young adults being co-owned with their parents, Statistics Canada figures show.

According to Canada’s statistical agency, 16.2 per cent of homes owned in 2021 by people born in the 1990s in the London area are also co-owned by their parents, a figure that’s slightly below the 17.3 per cent rate seen across the country.

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“Co-ownership between parents and children is one of the possible forms by which parents can help their children get a foothold in the housing market,” said Michael Mirdamadi, an analyst with Statistics Canada and co-author of the report.

The study was based on figures coming from the 2021 census, meaning there’s no way to compare the local rate to other periods and see whether it has increased as prices have risen along with interest rates.

But because those co-ownership rates go up the closer you get to some of Canada’s most expensive markets, such as Toronto and Vancouver and their surrounding communities, “we think this is indicative of the importance of parental housing wealth and the capability for parents who have that kind of asset to tap into in order to help their kids get into the market,” Mirdamadi said.

Other studies seem to back up that notion.

A 2021 report from CIBC, for instance, showed that nearly 30 per cent of first-time homebuyers that year received a financial gift from their parents, up from 20 per cent in 2015.

Austin Titus, a London-based broker with North Elm Realty Group, said he isn’t surprised by the local parent-child co-ownership figures, saying he’s also seen an increase in the number of first-time homebuyers getting support from parents.

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“Whether they’re just giving money (for a down payment) as a gift, or they’re coming on the mortgage as well, it has been huge in the past couple of years, especially as prices went up,” he said.

“I think a lot of first-time homebuyers out there, they tried to really do it on their own until they realized they couldn’t get approved for the price point they wanted or they couldn’t get approved for a mortgage at all.”

In April, the average price of a home in the London area was $656,000. Though that’s significantly lower than its peak of $825,000 in February 2022, higher interest rates have kept homeownership out of reach for many.

The recent Statistics Canada report also showed the value of a home owned by young adults born in the 1990s goes up if their parents own one or multiple properties.

“There appears to be a role of parental housing wealth on both the likelihood of homeownership and, when you do become a homeowner, the value of that property,” Mirdamadi said.

“This is likely going to make a significant contribution to reproducing inequality from one generation to the next, which is just to say, if your parents don’t own a home, you have a much worse chance of owning a home,” he said.


Parent-child co-ownership rates

Toronto: 27.2 per cent

Guelph: 27.1 per cent

Abbotsford–Mission: 26.7 per cent

Victoria: 23.7 per cent

Vancouver: 23.4 per cent

Kitchener–Cambridge–Waterloo: 19.5 per cent

Hamilton: 19.3 per cent

London: 16.2 per cent

Windsor: 11.5. per cent

Source: Statistics Canada

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