Major ‘Wealth Transfer’ Expected as Boomers Age: StatCan

Cyclists ride past homes in a residential neighbourhood in Vancouver in a file photo. The Canadian Press/Jonathan Hayward

Canadians are expected to see one of the biggest wealth transfers in history as older homeowners bestow gifts and inheritances on their heirs, according to a recent Statistics Canada report.

“A looming wave of interfamilial wealth transfers is set to occur as baby boomers age,” a March 26 Statistics Canada report said, as first reported by Blacklock’s Reporter.

Gifts and inheritances are one of the key ways for younger Canadians to obtain homeownership, StatCan said.

Story continues below advertisement

“A wealth transfer in the form of an inheritance, whether from a living or deceased relative, is just one way many homeowners have benefited from familial support when entering the housing market,” the report said.

It noted that those born in the 1990s whose parents were homeowners were “twice as likely to own a home in 2021” when compared to those whose parents did not own a home.

The authors said that three in 10 homeowners in 2019 reported an inheritance with a median value of $67,000, compared with two in 10 renters who reported a median inheritance of $33,000.

“As home values appreciated strongly throughout the COVID-19 pandemic period, so too did inheritances for homeowners,” the report said, noting that in 2023, the median inheritance Canadian homeowners received had risen to $85,100.

The report said that 5 percent of families were living in homes that were obtained completely or partially through an inheritance or gift.

Story continues below advertisement

Nine percent reported that at least some of the down payment for their home had been from a gift or an inheritance.

Statcan said that real estate equity represented 42 percent of household wealth in 2023.

The report follows nearly a year after a similar StatCan publication that looked at the connection between parents’ wealth and the value of a home owned by their adult children.

In 2021, 17.3 percent of homeowners who were born in the 1990s co-owned the property with their parents, StatCan said in the May 2024 report.

Story continues below advertisement

The report authors cited a study from the Canadian Imperial Bank of Commerce (CIBC) which found that 30 percent of first-time homebuyers in 2021 received money from their parents, up from 20 percent in 2015.

CIBC’s numbers also showed that homeowners in B.C. and Ontario were most likely to have a co-ownership arrangement with their parents when compared to other parts of Canada. In B.C., 20.3 percent of those born in 1990s had co-ownership arrangement with their parents. That number was 19.8 percent in Ontario.

A Bank of Canada paper from July 2024 stated that 74 percent of adult children who shared a mortgage with parents would not have qualified for the loan without a parent’s co-signature.

It also said parental co-signing for first time home buyers mortgages has risen from 4 percent in 2004 to 13 percent in 2022. The authors noted that with a parental co-signature, people are able to enter the housing market about five years earlier than without a co-signer.