Challenges Faced by Gen Z in Achieving Homeownership

The housing affordability crisis is a result of long-standing economic and societal dynamics, heavily influenced by generational behaviors.

Baby Boomers, often hesitant to downsize or move to retirement communities, have indirectly contributed to limited housing inventory. This reluctance increased during the COVID-19 pandemic when these facilities were seen as high-risk environments.

While downsizing was once a feasible option for older generations, it no longer provides the same financial benefits. Statistics Canada estimates that 14 percent of Canadians aged 65 and older still have mortgages on their homes. After considering Realtor commissions, mortgages, and other debts, the equity available to purchase another home is not as substantial as it was five years ago.

For example, a semi-detached home in Toronto averages $980,000, while a condominium costs $615,250, according to CREA’s Q3 2024 data. Even after factoring in selling costs and fees, downsizing may not leave much for retirement. With life expectancy on the rise—Canadians now live an average of 16 years longer than their parents—retirees must manage these funds for 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 inherit or purchase homes from their grandparents or parents. Gen Z faces higher debt-to-income ratios compared to previous generations, complicating their path to homeownership.

Statistics Canada reports that those under 35 are reducing their mortgage debt through frugality and sacrifices in discretionary spending, but such behaviors also impact economic growth in sectors like travel and dining.

Generational wealth—or the lack thereof—further exacerbates the issue. Without financial support from parents or grandparents, many Gen Z individuals must rely solely on their earnings to build wealth and assets—a daunting task in today’s economy.

How the financialization of housing is worsening the crisis

Another significant challenge for Gen Z is the financialization of housing. Baby Boomers, comprising a quarter of the population and owning about 41 percent of the homes in Canada, 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 strain younger generations saving for a down payment.

Immigration patterns also contribute to the housing crisis, as landlords and investors convert properties into rental units, putting upward pressure on rents and diminishing the stock of homes available for purchase, making it difficult for Gen Z and millennials 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 percent, according to Statistics Canada. This trend has eroded the purchasing power of younger generations, who face stagnating wage growth. Despite these challenges, many in Gen Z approach their situation with humor and resilience, acknowledging that homeownership may be out of reach.

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 future generations.