Younger Canadians giving up on homebuying aspirations: StatCan

Intensifying affordability squeeze hitting younger generations hardest

Younger Canadians giving up on homebuying aspirations: StatCan

Young Canadians face mounting challenges in achieving key financial milestones, particularly homeownership, according to a report by Statistics Canada released Wednesday.

“Barriers to important life cycle milestones and transitions have intensified in Canada,” the national statistics agency said. “Sustained food inflation, elevated housing prices, and increasingly unaffordable rental costs across much of the country are casting a shadow over the homeownership dream for many households — particularly young families.”

Young Canadian households, where the primary earner is under 35, reported their mortgage burden eased during the third quarter of 2023. This suggests they are either accelerating mortgage pay-downs, abandoning home purchasing plans altogether, or downgrading to cheaper housing options.

Rising rental costs amid persistently high shelter inflation were flagged as major barriers keeping homeownership out of reach for many younger Canadians. Renters face heightened financial stress compared to homeowners, according to StatCan.

“Younger households are starting to turn away from the housing market, as their overall mortgage balances have declined in recent quarters,” the agency said.

Despite witnessing improvements in debt-to-income ratios due to rising wages and reduced mortgage burdens, young Canadians are grappling with higher debt-servicing ratios, particularly as interest rates climb. Young households spent 10 cents per dollar earned on debt in 2023, up from seven cents in the previous year.

While debt-to-income ratios have improved for young households as wages grow, their debt-servicing ratios "increased markedly" due to higher interest rates, with this group spending 10 cents of every dollar earned on debt payments last year, up from 7 cents in 2022.

Mortgages carried by young homeowners tend to be larger compared to older generations. With housing assets making up 89% of their total wealth, this cohort is more vulnerable to real estate fluctuations.

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“As households less than 35 years of age reduced the value of their real estate holdings over the past year, their wealth grew at a slower-than-average pace,” StatCan said.

The agency warned that socioeconomic mobility will be limited if these affordability issues persist, widening inequality as homeownership increasingly hinges on parental assistance rather than individual merit.

"The financial realities of those with limited access to parental supports may contribute to heightened inequality, particularly if important sources of wealth accumulation, such as owning a home, are delayed or become inaccessible to larger numbers of young Canadians," the report cautioned.

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