As Vancouver’s housing prices continue their upward trajectory, the real estate landscape is undergoing significant shifts. For younger generations, particularly Generation Z and, soon, Generation Alpha, entering the housing market has become an increasingly challenging life milestone. However, a strategic trend is emerging among Generation X and Millennial parents: purchasing homes with their children’s future in mind.

According to new data from Statistics Canada, one in five homeowners in British Columbia who were born in the 1990s co-own with their parents, underscoring the urgency to invest in real estate now.

Source: Statistics Canada

This approach allows parents to not only secure a foothold in an increasingly competitive market but to also ensure their children won’t be left behind in the race for homeownership.

The ‘bank of mom and dad’

More and more, the ”bank of mom and dad” is becoming a go-to for young homebuyers needing financial help. Parents and grandparents aren’t just gifting money; they’re becoming landlords or co-investors to help their children get into the market.

In 2013, my spouse and I saw an opportunity to invest in real estate to secure a foothold in the market. We bought a pre-sale property with future generations in mind, hoping that by the time our kids were ready, they’d have a valuable asset to move into or sell. Success in Vancouver’s real estate market requires strategy and foresight.

When we made the initial investment, our children were eight and four. We realized that a proactive approach would make it easier to help them in the future. The property cost us a little over $300,000 back then, and regardless of current market trends, that put it on track to increase significantly, providing options for our children by the time they are ready to move in or resell. 

Investment properties for future generations

Throughout my almost 25-year career in real estate, purchasing investment properties as a family strategy has also become increasingly common. These investments serve dual purposes: they may not provide significant rental income in the short term, but they will largely cover mortgage and strata fee costs and act as future residences for the next generation. By securing properties now, parents ensure that their children can live nearby and benefit from generational wealth transfer.

Pre-sale properties offer an enticing investment opportunity, allowing parents to secure home ownership early and benefit from a longer period to pay off the mortgage. This strategy not only safeguards against rising market prices but also capitalizes on the property’s appreciation over time, amplifying the financial advantage. 

The Vancouver market: Rising prices and rental pressures

Over the past decade, the Vancouver housing market has experienced consistent price increases and upward pressure on rent.

According to a recent liv.rent report, today’s young people are spending over 50 per cent of their monthly income on rent, creating significant challenges in saving enough for a down payment. As a result, many are choosing to live at home longer with parents or relatives, or opting for smaller rental spaces with roommates.

Developers and multigenerational buyers

Developers are now focusing on the needs of multigenerational buyers, emphasizing properties that promise value appreciation. They prioritize prime locations with access to schools, transit, hospitals and services.

Projects like FRAME by Peterson Group showcase this trend, providing diverse unit sizes and prices to accommodate various family needs centrally located between downtown Vancouver and Metrotown. FRAME is among several developments catering to these changing preferences, ensuring families find the perfect match for their unique situations.

The broader impact of generational housing solutions

The evolving landscape of Vancouver’s real estate market, characterized by rising prices and the growing necessity for parental support, underscores a pivotal shift in how families approach homeownership.

The “bank of mom and dad” has transitioned from a supplementary aid to a foundational strategy, enabling younger generations to secure their place in the market (we had help from my parents when we took the leap in securing our first condominium investment in 2013).

Through strategic investments in properties, notably pre-sale units, families are not only navigating the intricacies of the housing market but are also laying down the groundwork for generational wealth transfer. This trend, while highlighting the challenges faced by younger buyers, also reflects a proactive and unified family approach toward ensuring long-term financial security and stability.

However, it’s important to acknowledge that this collaborative generational support is not a possibility for everyone. As the real estate market continues to evolve in Vancouver and other major Canadian cities, many potential buyers without access to help from family face increasing barriers to homeownership.

This discrepancy underscores the growing concern that homeownership may become even less attainable, contributing to a widening gap where only those with substantial family support or significant incomes can secure a place in the housing market and further reinforces the need for innovative housing solutions that serve all segments of a healthy, diverse society.