By CBC News |
Immigrant families who have been in Canada for more than two decades tend to be worth more than families who were born in the country, new data from Statistics Canada released Tuesday shows.
The data agency released an analysis of numbers from 1999 to the 2016 census, comparing immigrant families with those born in Canada and looking at various aspects of their financial lives.
The findings show that both groups have, on the whole, seen a big increase in their wealth over the past two decades.
The average wealth of established immigrant families — those whose major income earner was aged 45 to 64 and landed in Canada at least 20 years earlier — grew from $625,000 in 1999 to $1.06 million in 2016, an increase of $435,000, or more than 69 per cent.
Comparable families where the major income earner was born in Canada are worth less, on average, but saw a bigger gain, from $519,000 to $979,000. That’s an increase of $460,000 or more than 88 per cent.
One reason for the discrepancy may be that immigrant families are much more likely to put their money into real estate. “Compared with Canadian-born families, immigrant families generally hold a greater share of their wealth in housing but a smaller share in [registered pension plan] assets,” the data agency said.
On average, 69 per cent of the wealth increase for immigrant families can be traced to gains in the amount of equity that they have in their homes. That compares to 39 per cent for native-born Canadians.
On the flip side, one third of the wealth gain for Canadian-born families is because of increases in the value of pension plan assets. For immigrant families, that share is just 17 per cent.
Political sociologist Howard Ramos at Dalhousie University in Halifax says it is not surprising to see immigrants being relatively more eager to climb the housing ladder instead of putting their money into other things.
“Many people may not be getting RRSPs or other investments, because they may be self-employed or have had career disruption when they came to Canada,” he said in an interview, “which leads them to the one asset they can control — home ownership.”
“The evidence shows that this as a strategy has paid off in the past and is still paying off for newcomers today,” he said.
Immigrants’ preference for housing as an investment may also be a factor in their willingness to borrow, too. Established immigrant families had a debt to income ratio of 2.17 in 2016, compared with 1.32 for Canadian-born families.
“Most of the difference was due to the larger mortgages carried by immigrant families,” Statistics Canada said.