Vancouver is the Canadian city with the highest percentage of millennial homeowners who own their homes outright — even though the number of millennial homeowners in the city is well below the national average.
A substantial 19% or nearly one in five Vancouverites between the ages of 25 and 34 own their homes without owing anything on a mortgage, according to Statistics Canada data compiled by Andy Yan, a professor at Simon Fraser University and director of the school’s City Program. That 19% represents 2,485 homeowners, who are also cleared of any debts secured to their dwellings like home equity lines of credit.
It also accounts for nearly all the millennial homeownership in the city. Only 22% of that age group owns real estate at all in Vancouver — which means that a mere 3% of the city’s millennial homeowners have mortgages owing.
These stats are surprising given Vancouver’s well-earned reputation as Canada’s most expensive housing market. But more findings by Yan help explain the city’s real estate landscape — much of which has to do with extreme wealth.
A closer look at the homes in question is instructive. The median value of the homes owned by that mortgage-free, 19% contingent is $2.5 million — well above the city’s $1,062,100 average that was reported in October by the Vancouver Real Estate Board.
In other words, these are not your average home — and their buyers are likely not your average homeowner.
Home ownership among millennials is fairly low in Vancouver relative to the rest of Canada, where the average rests at roughly 48%. But the fact that nearly all of the city’s millennial homeowners can afford multi-million dollar homes, without mortgages, suggests that the people who do own are disproportionately wealthy.
Josh Gordon, an assistant professor at SFU, thinks that the money might be coming from Vancouver’s own real estate market, where longtime homeowners have built considerable equity from the city’s rising housing costs. “The main takeaway is that in Vancouver, you have a lot of parents that are buying real estate outright for their kids,” he told the Globe and Mail on Tuesday.
“Parents are using their substantial equity gains to help their kids buy housing. In other cities that are more affordable, parents don’t tend to do that, or don’t need to do that.”
Paul Kershaw, a professor at the University of British Columbia and the founder of Generation Squeeze, a group that advocates on behalf of young adults, also thinks that parents are helping their kids out. But he thinks other factors are at play, too.
“First, B.C. has more satellite families parking wealth with their young adult kids to minimize their taxes owed in Canada and/or abroad,” Kershaw says. “Second, many older British Columbians have gained tremendous wealth in their homes by comparison with the rest of the country, and use some of that wealth to help out their children in the B.C. housing market. Also, it’s been a great investment. And third, B.C. is attracting a disproportionate share of very high net wealth younger adults, with the means to pay off their homes quickly.”
One realtor, Alex Jopson, says that he has had some clients who were able to buy mortgage-free without the help of their parents, relying on their income alone. These clients typically worked in the tech and movie industries — and they hardly represented the majority.
“I have some clients that have bought outright in the last five years, but the majority of that was family wealth,” Jopson says.
Yan is more straightforward about the matter. “At the end of the day,” he says, “It seems that being able to choose the right parents is the shortest path to home ownership in the city of Vancouver.”