The Bank of Mom & Dad is real, and it's doling out money

Kelowna realtor Rick Hamer-Jackson is a big advocate of the Bank of Mom & Dad.

"Most young adults today would never be able to buy their own home in Kelowna without help from mom and dad," said Hamer-Jackson, who sells real estate with his brother, Brad, as part of ReMax's Team Hamer-Jackson.

"The smart way to buy nowadays is to go to the Bank of Mom & Dad."

Now, this bank isn't a bricks-and-mortar institution or even an online lender, it's kids hitting up their parents for all, or part, of the downpayment for their first home.

Thus, the slangy colloquialism -- the Bank of Mom & Dad.

Hamer-Jackson sees one in five or one in six of his deals involving parents (or even grandparents) helping out their kids or grandkids with the downpayment and-or co-signing the mortgage.

"It's very common," he said.

"Most young people aren't getting into the market otherwise."

Hamer-Jackson estimates other realtors see the same sort of numbers.

Thus, it's a bonafide trend.

The benchmark selling price of a typical single-family home in Kelowna is around $990,000, a townhouse $729,000 and a condo $500,000.

Those prices are all unaffordable for young, first-time buyers, even if they have a good job.

So, downpayment and maybe even monthly mortgage help is needed from parents .

Information released this week by Statistic Canada proves it.

Go beyond the 'Intergenerational housing outcomes in Canada' title of the report and you find out that "reliance on the Bank of Mom & Dad" has entered government lexicon.

StatsCan figures from 2021 show one in six homes, about 17%, owned by people born in the 1990s (millennials and Gen Zers) are actually co-owned with a parent or parents.

That number goes up to almost 30% in cities where homes are more expensive and kids need help getting into the housing market -- namely Vancouver, Toronto, Victoria and Kelowna.

The so-called 'great wealth transfer' is also at work.

The StatsCan report also found that adult children of homeowners are twice as likely to own a home compared to the adult children of parents who don't own their own home.

That's because the older generation can tap into their incredible house equity to help their own children or grandchildren buy a home.

The report concludes: "These results suggest that parental property ownership affects not only children's ability to access home ownership as adults, but also the value of the properties they own and, therefore, their ability to build up greater home equity and financial assets."

"Absolutely, parents have to have the money themselves and be believers in home ownership for this to happen," said Hamer-Jackson.

"It can work in so many ways. If the young buyer doesn't have credit and doesn't qualify for a mortgage then mom and dad buy them a home to live in and hopefully they can pay the mortgage with money from their job. Or, if the young person may be able to qualify for a mortgage with good credit, but needs money for the down payment. Basically, families are doing whatever it takes to get into the market."

Qualifying first-time home buyers can get into their own home with a 5% down payment, but Hamer-Jackson points out that leaves such a huge balance that most young people could never handle the ongoing mortgage payments.

So, a bigger down payment, with help from mom and dad, is the way to go to try to keep monthly mortgage payments manageable.

Parents are also helping their kids get out of expensive rentals and into home ownership so they at least start building equity.