Each year, we have several of our clients help their children or grand-children with loans and gifts, or co-signing mortgages, and all kinds of ways to help their off-spring. Of course there are lots of different implications to consider including: Do I expect this amount to be paid back? How might we consider protecting the family in the event we lend the money, and then there is a divorce? Are their tax-advantaged ways to give money for the purchase of their home?

 

So, we work with our clients to assess the different options, and what might make sense, from a planning and liability perspective. We have also done a lot of longer-term savings strategy plans for many families, to help with the mid-term time horizon for those who are planning to purchase their home at a later time.

 

The two charts below help to illustrate why there is more inter-generational gifting or helping for home purchases. Roughly a third of young adults live at home. While this is a US number, the same applies to Canada. The share of 18 to 24 year olds that live at home (or attend college) remains large at 23%. Further, there has been a rise in the share of adults aged 25 to 34 living at home with their parents. In 2023, 10% of this subset of the population lived at home, double the rate in 1960, but down slightly from the peak in 2020 during the pandemic.

 

In Canada, there is another significant reason for the reality that young people can’t afford as readily the purchase of their first home: Canadian household median income has barely changed since 1976…On the other hand, the prices of homes have risen rapidly over the same period.

 

I also found it interesting that according to the analysis of data from the OECD and Statistics Canada on the way people spend their time shows that Canadian couples now work so much that they have a full eight month less time to spend with their children before they turn 18 than their peers in other rich OECD countries and G7 economies. Children or not, Canadians have lost more than 10 per cent of their leisure time since 1988.

 

Speaking of leisure: this Monday, September 30th is a Federal Holiday, and a bank holiday, for the National Day for Truth and Reconciliation. In terms of what is open or not, it’s a little convoluted, for those who still get old fashion mail delivery, no service Monday. Schools all open on Monday in Ontario, and the stock markets are still open, so we will be in the office. The fixed income market closed, so no GIC purchases for example. Any manual electronically transmitted banking payment requests, however, won’t be able to be complete until Tuesday.

 

A Canadian, Mike Weir, is the captain of the President’s Cup: an international golf match that pits America’s best golfers against the rest of the world, excluding Europe. As much as I’d like the cheer for the international team at the Royal Montreal Golf Club this weekend, team USA is a lock to win!