The housing affordability crisis is a product of long-standing economic and societal dynamics, deeply influenced by generational behaviors.
Baby Boomers, often reluctant to downsize or transition to retirement communities, have indirectly contributed to limited housing inventory. This reluctance grew during the COVID-19 pandemic, as these facilities became perceived as high-risk environments.
While Downsizing was once considered a viable option for older generations, it no longer provides the financial benefits it once did. Statistics Canada estimates 14 per cent of Canadians 65 and older still have mortgages on their homes. Once accounting for Realtor commissions, mortgages and other debts, the disposal equity to buy another home is not the same as it was five years ago.
For instance, a semi-detached home in Toronto averages $980,000, while a condominium costs $615,250, per CREA’s Q3 2024 data. After factoring in selling costs and associated fees, even downsizing doesn’t leave much left for retirement. With life expectancy increasing—Canadians now live, on average, 16 years longer than their parents—retirees face the daunting task of stretching these funds across two decades or more.
Inheriting an unequal landscape
This stagnation in housing mobility means that essential inventory remains locked up, making it increasingly difficult for Gen Z to either inherit or purchase homes from their grandparents or parents. As a result, Gen Z finds themselves in a precarious situation. They are likely to endure higher debt-to-income ratios compared to their predecessors, which complicates the path to home ownership.
Statistics Canada reports that while those under 35 are reducing their mortgage debt through frugality and sacrifices in discretionary spending, such behaviours also suppress broader economic growth in sectors like travel and dining.
Generational wealth—or the lack thereof—further compounds the issue. Without financial support from parents or grandparents, who may not have built enough equity or wealth, many Gen Z individuals must rely solely on their earnings to create wealth and assets—a far more daunting task in today’s economy.
How the financialization of housing is worsening the crisis
Another major hurdle for Gen Z is the financialization of housing. Baby Boomers make up a quarter of the population and own approximately 41 per cent of the homes in Canada, according to Statistics Canada, and increasingly view properties as investment opportunities rather than places to live.
The Canadian Human Rights Commission identifies this trend as a key driver of rising housing prices. Landlords converting properties into rentals reduce the supply of homes for sale while rising rents further strain younger generations trying to save for a down payment.
Immigration patterns also contribute to the housing crisis, as landlords and investors purchase properties and convert them into rental units, popular with students and transient populations. This not only diminishes the stock of homes available for purchase, it also places upward pressure on rents, making it an uphill battle for Gen Z and even millennials struggling to enter the housing market.
Inflation and stagnant wages are a double whammy for Gen Z
Inflation rates have surged over the past decade, reaching cumulative levels of 32 per cent, according to Statistics Canada. This trend has eroded the purchasing power of younger generations, who also face stagnating wage growth. For instance, wages increased by just 9 per cent between 1973 and 2013, while the cost of living soared disproportionately.
Despite these obstacles, many in Gen Z approach their situation with a sense of humour and resilience, often accepting the possibility that home ownership may be out of reach. This acknowledgment, paired with the ongoing life expectancy of baby boomers, implies that younger generations like Gen Alpha may inherit not only the challenges but also the wealth that their predecessors have struggled to accumulate.
The question remains: will society learn from these experiences, or are we destined to repeat the mistakes of the past? Only by fostering meaningful dialogue and enacting inclusive policies can we ensure a sustainable housing market for generations to come.
Affordability : I would suggest that many Gen-Z’s lack of getting into the market (owning a house ) comes from a couple other points . They no longer see local involvement and community as the life experience. They are obsessed with the fact that they have to travel everywhere, holiday in special places concerts ,basically self absorbed. Also less of them have families (children of their own )so the need for a home of their own does not speak as loudly as earlier generations. Another point would be that they feel the place they buy needs to be perfect . The perfect ungraded home is of course out of their price range. They don’t feel that they need to start somewhere ( either do there parents). For years first time buyers bought homes that needed upgrading , usually cosmetic, it was their way into the market . To slowly upgrade a place , gain equity make it yours was the strategy . Now the GEN-Z are saying, I need a place that’s all fixed up and beautiful , how can I ( parents also say their kids need a perfect place ) live in a place with old carpets and paint. Yet they still want the appreciation on their purchase .
Another point is that the Gen-Z don’t need to worry as much about the future, (retirement) as most jobs have some retirement package , but they also see the value of their parents assets , home(s), which will be theirs . Smaller families means more for the surviving children. There view of the future is different , focused on short term goals ,( travel , new car, concerts etc.) as they have enough long term safety nets they can rely on later ( parents home, government programs etc. )
Your observations about Gen Z’s approach to home ownership certainly bring up some interesting points, but they might oversimplify a more complex reality. While it’s true that Gen Z prioritizes experiences like travel and concerts, this isn’t necessarily a sign of self-absorption; it reflects a different set of values shaped by a rapidly changing world. Many in this generation have witnessed economic crises, student debt, and a housing market that seems increasingly out of reach. These factors undoubtedly influence their priorities and perceptions of homeownership.
Regarding community involvement, it’s important to note that Gen Z often seeks connection through digital platforms and global networks, which may not always translate to traditional local community engagement. Just because the form of their involvement is different doesn’t mean it’s less valuable or meaningful.
As for the expectation of a “perfect” home, this trend can be seen as a response to the inflexible and competitive housing market, where many feel pressured to buy a move-in-ready place due to the costs and challenges of renovation. This doesn’t mean they lack the ability or desire to invest in a home; rather, they may be looking for a sustainable option that fits their lifestyle in an environment that can be quite unforgiving.
Moreover, the perception of security regarding retirement and inheritances might be comforting for some, but it also reflects an understanding of the economic challenges that their parents faced. Many members of Gen Z are keenly aware that reliance on inherited wealth isn’t a guaranteed safety net; economic shifts can alter those dynamics quickly.
Finally, the notion that Gen Z isn’t concerned about the future is reductive. Many are deeply engaged with social issues, climate change, and economic justice, which shapes a future-oriented mindset, albeit one that may look different from previous generations.
In essence, while there may be shifts in priorities and expectations, it’s essential to recognize that these changes arise from the unique challenges and circumstances facing Gen Z, rather than framing them as shortcomings.