Immigrant families more likely to own home than add to pension plan, StatsCan says

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.

While their wealth levels may be different, the study shows that there's little evidence that the two groups manage their finances any differently.

"Specifically, the study finds no evidence that immigrant families use payday loans, withdraw money from registered retirement savings plans or pay off only part of their monthly credit card balances to a greater extent than Canadian-born families of similar age do," the data agency said.

Ramos says the numbers are some hard data to show that on the whole, immigrants largely become "model economic citizens" who are on the whole doing exactly what was hoped for them.

"It's interesting to see the evidence of the success of immigrant economics."

Jelena Zikic, an associate professor at York University's school of human resource management who studies skilled immigrants, says "they have a mindset of being safe and secure," so seeking to climb the property ladder makes a certain amount of sense.

"Most of the migrant motivation has to do with 'I want my kids to be better off'," she says. "There's a fear of losing their ground in a new place, so they see [tangible investments] as a way to protect themselves." 

While it may be encouraging to see immigrants becoming wealthier the longer they are in Canada, she says that shouldn't suggest that they have it easy — quite the opposite, in fact.

She says stories of very qualified skilled immigrants coming to Canada and then having to take low-paying jobs because their credentials aren't recognized are rampant, something that is bad for them and bad for Canadian society.

"There's a ceiling effect," she says. "They enter, but they can't always progress."

She adds that those who do succeed often do so because of their own resilience.

"They had very strong motivations to come to Canada, so when they are here they do everything they can [to move up]," she says.