Fact 1: According to the OECD, there are millions of vacant homes around the world. Houses sit empty while prices appreciate aggressively and are in dangerous bubble territory in some places, like Toronto.
Fact 2: As a proportion of the housing stock, Japan has the highest rate of vacant homes. In North America, over 11% of homes in the US and 8% in Canada are vacant. That’s 15.6 million and 1.3 million empty homes respectively. While there’s some debate over the method used to obtain these estimates, if even remotely accurate they signify that a lack of housing stock isn’t necessarily the primary driver behind rising real estate prices. It appears like speculators are hoarding homes like people hoarded toilet paper in March 2020.
Fact 3: So how does anyone afford to buy a house in cities experiencing intense real estate price appreciation? Many get help from the bank of mom and dad. In Toronto, for example, about 25% of first time home buyers receive an average of $175,000 from their parents. Similarly, in Vancouver (second chart) 23% of first time home buyers receive an average of $210,000 from their parents.
While the parental instinct to support their children is understandable, home ownership is increasingly becoming dependent on familial wealth, exacerbating societal wealth inequality.