A new, more difficult path to home ownership

Lindsay DeMerchant and Mark Loggie thought of buying a house together at the start of the pandemic.

The Fredericton couple were offered help from Loggie’s parents.

But then prices blew up.

“It’s something we flirted with,” said DeMerchant, 32, an executive assistant in the Office of the Green Caucus. “We had family members offering to help with upfront costs, which made it seem more obtainable at 2020 prices. But since then, people have moved into New Brunswick and snatched up a lot of the available housing stock, paying astronomical prices for what wouldn’t have cost so much in the past. And I’ve had friends tell me they had to get roommates after buying a house because interest rates went up too much.”

Since then, Loggie has gone back to school to take graphic design in the hopes of landing a better job and one day being able to afford that starter home.

Their experience isn’t far off from the findings contained in a new Statistics Canada study that looks at home ownership and intergenerational inequity.

It showed that although home ownership remains unobtainable for many millennials and Gen Zers, the chances of these young adults born in the 1990s buying their first home increases markedly if their parents own their own home. The more properties the parents own, the more likely the adult children will own one themselves.

What’s more, a parents’ property ownership was so important that it outweighed other factors such as income, age and place of residence.

The authors, Michael Mirdamadi and Aisha Khalid, said they wanted to study intergenerational differences and growing disparity. They quickly established that when it comes to home ownership status of young adults, the number of properties owned by their parents was key.

People born in the 1990s whose parents were homeowners were twice as likely to own a home than those whose parents were non-homeowners.

And that correlation was just as strong in New Brunswick, where home ownership rates are still among the highest in the country, despite affordability struggles.

“The analysis establishes a robust positive relationship between parents’ property ownership and the likelihood of homeownership for their adult children,” stated the paper, released Monday. “Inequality of homeownership appears to be reproduced across generations as parents’ property ownership conveys significant financial advantages to their children.”

Looking at the latest data from 2021, New Brunswickers born in the 1990s had the highest rate of ownership in the country – close to 21 per cent, compared to the national average of just under 16 per cent.

That compares to an overall home ownership rate of all adults of 73 per cent in New Brunswick and 67 per cent Canada-wide.

Drilling down deeper, the statisticians looked at adult children and how much property their parents owned. The differences in the chidren’s home ownership levels were stark.

The adult children of non-homeowners had a homeownership rate of eight per cent, while the adult children of homeowners had a homeownership rate of 17 per cent, making them more than twice as likely to own a home.

For the adult children of parents who were multiple property owners, the homeownership rate was higher, at 24 per cent, nearly triple the rate for the adult children of non-homeowners.

The authors noted that intergenerational wealth transfers were reproducing wealth inequality across generations, a finding in Canada and several other countries.

“Adult children of homeowners experience several advantages in relation to homeownership compared with the adult children of renters,” they stated. “The adult children of homeowners are more likely to receive a down payment as a gift, become homeowners and transition to homeownership sooner.”

DeMerchant said that conclusion did not surprise her.

“That sounds about right. We were going to get help from family but things changed,” she said. “People nowadays get help from their parents to buy their first home and don’t just rely on saving up money.”

She said she was just happy to have an apartment where her dog is allowed and the rent hasn’t gone up as much as some of the horror stories she’s heard.

“And we have a roommate,” she said. “Helps pay the bills.”

John Chilibeck, Local Journalism Initiative Reporter, The Daily Gleaner