As Vancouver home prices continue to trend upward, the real estate industry is undergoing major changes. For younger generations, especially Gen Z and soon-to-be Gen Alpha, breaking into the housing market is an increasingly difficult milestone in life. However, there is an emerging strategic trend among Gen X and millennial parents to buy homes with their children's future in mind.
According to the latest data from Statistics Canada, one in five homeowners in British Columbia born in the 1990s co-own their home with their parents, underscoring the urgency of investing in real estate now.
Source: Statistics Canada
This approach not only helps parents secure a foothold in an increasingly competitive market, it also ensures that their children aren’t left behind in the race to homeownership.
“Mommy and Dad's Bank”
Young homebuyers in need of financial assistance are increasingly turning to “Mommy and Dad Bank.” Parents and grandparents aren't just donating money; they're becoming landlords and co-investors to help their kids get into the housing market.
In 2013, my wife and I saw an opportunity to invest in real estate and get a foothold in the market. We purchased pre-sale properties with future generations in mind, hoping that by the time our kids were ready, we would have a valuable asset to move in or sell. Succeeding in the Vancouver real estate market requires strategy and foresight.
Our kids were 8 and 4 when we made our initial investment, and we realized that if we took a proactive approach, it would be easier to help them in the future. The property was priced at just over $300,000 at the time, but regardless of current market trends, it is expected to appreciate significantly, giving us more options by the time our kids are ready to move in or resell.
Investment property for future generations
Throughout my almost 25-year career in real estate, it has also become increasingly common to purchase investment properties as a family strategy. These investments serve two purposes: they may not generate significant rental income in the short term, but they will nearly cover the costs of the mortgage and management fees, and they will serve as a future residence for the next generation. Securing a property now allows parents to ensure their children can live nearby and benefit from the intergenerational transfer of wealth.
Pre-sale properties offer an attractive investment opportunity, allowing parents to secure homeownership earlier and extend the mortgage repayment period. This strategy not only protects against rising market prices, but also increases the financial benefit by taking advantage of the increasing value of real estate over time.
Vancouver Market: Rising Prices and Rental Pressures
Over the past decade, Vancouver's housing market has seen consistent price increases and rents coming under upward pressure.
According to a recent liv.rent report, young people today are spending more than 50% of their monthly income on rent, making it extremely difficult to save up a down payment. As a result, many are choosing to stay at home with their parents or relatives for longer, or to rent small spaces with roommates.
Developers and multigenerational buyers
Property developers are now focusing on the needs of multigenerational buyers and prioritizing properties that are likely to appreciate in value, prioritizing prime locations with good access to schools, transport, hospitals and services.
Projects like Peterson Group's FRAME exemplify this trend, located halfway between Downtown Vancouver and Metrotown and offering a variety of unit sizes and price points to accommodate the needs of different families. FRAME is one of several development projects that caters to changing tastes and allows families to find what's best for their unique situation.
The broader impact of intergenerational housing solutions
The evolution of Vancouver's real estate market, characterized by rising prices and a growing need for parental support, highlights a significant shift in the way families approach homeownership.
“Mom and Dad Bank” is moving from supplemental assistance to a foundational strategy, helping the younger generation secure their place in the market (when we decided to invest in our first apartment in 2013, we had the assistance of our parents).
Through strategic investments in real estate, especially pre-sale properties, families are not only navigating the complexities of the housing market, but also laying the foundation for intergenerational wealth transfer. While this trend highlights the challenges facing younger buyers, it also reflects a proactive and unified family approach to ensuring long-term financial security and stability.
However, it is important to recognize that this collaborative intergenerational support is not possible for everyone. As the real estate market in Vancouver and other major Canadian cities continues to evolve, many potential buyers without family support face increasing barriers to homeownership.
This discrepancy highlights growing concerns that homeownership may become even more difficult, leading to a widening gap where only those with significant family support or high incomes can secure a position in the housing market, further reinforcing the need for innovative housing solutions that serve all segments of a healthy, diverse society.