Meanwhile, renters may never afford a down payment without family help
Young Canadians who are renting a home are likely to be asset poor compared to homeowning peers, but making that literal move into owning a home is likely out of reach for many.
An analysis of inheritance data from Statistics Canada’s Survey of Financial Security by the agency’s Carter McCormack and Timothy Sheridan, reveals that real estate equity accounted for 42% of household wealth in 2023, rising to almost half for young families.
But the report reveals a disparity between those who had familial help to buy a home and those who are renting, including many who will be trying to do so while saving for a down payment.
It shows that inheritance played a far greater role in 2023 than just a few years earlier. In 2019, three in 10 homeowners reported receiving an inheritance at a median value of $67,000, while 2 in 10 renters received a median value of $33,000. But strong gains in home values during the pandemic meant that by 2023, the median inheritance Canadian homeowners received had risen to $85,100, with renters seeing a median of less than $70K.
The stats reveal that just 18% of all Canadians had received a general inheritance in 2023, those under 35 were more likely to report that at least part of their home down payment was gifted to them, and around one third of these young adults were helped at least in part to buy their home through a specific gift for this purpose.
Renters assets
Looking at the financial assets of homeowners and renters, there is a clear gap, based on the data.
The median renting family under 35 in 2023 had $12,000 in liquid assets, while their homeowning peers had $37,000 in liquid assets and a residence with a median value of $460,000. And the analysis found that if the renters liquidated all of their assets they would still be $80,000 (median) short of the down payment they need to buy a home.
The authors also found that young homeowners received a median inheritance of almost $45K more than renting peers.
On a positive note, they found that the financial resilience of renters did improve in 2023, with a higher percentage having the liquid assets necessary to meet the minimum after-tax, low income measure threshold for three months. A person living along would need approximately $6,900 while a household of four would need $3,500 per person totaling $13,500.
