What was once arguably a rite of passage into adulthood — and, indeed, a completely achievable milestone — has unfortunately become a fantasy. Getting in on real estate today is proving to be a difficult task for working adults of any generation, but especially so for millennials and Gen-Zers. The average price of a home in Toronto and Vancouver sits roughly at $1.2 million, having nearly tripled since the 1970s.
According to the 2016 Statistics Canada census, Canada’s homeownership rate has steadily increased from 60.3 per cent in 1971 to 68.4 per cent in 2006 before reaching a high of 69 per cent in 2011! That same census marked 2016 as the first year in almost 50 years where homeownership actually decreased, sliding down 1.2 per cent to a total of 67.8 per cent. The data revealed that middle-aged Canadians (40 to 59 years old) were 1.4 times more likely to have a mortgage than older millennials between the ages of 30 and 39; they were also five times more likely to do so than younger millennials and Gen-Zers aged 20 to 29.
Prior to the start of the pandemic, Canada’s homeownership rate stood at a solid 68.6 per cent. Homeownership — or perhaps, more correctly, the lack of opportunity for homeownership — has long been a salient topic for millennials since the oldest members of the generation joined the workforce. However, it’s a particularly pressing issue now as millennials not only represent the largest generational group in Canada (at nearly 30 per cent) but also outnumber Gen-Xers and Boomers in the workforce. Yet, as of 2021, a staggeringly low 12.9 per cent of millennials are actually homeowners, compared to Gen-Xers’ 68.9 per cent.
What’s most important to note when trying to unearth the reason why the majority of millennials aren’t yet buying homes is that there isn’t just one reason. Rather, there are multiple, interconnected reasons. Affordability is certainly an issue at the forefront, but there are many factors that contribute to the lack of affordability. A higher cost of education, which, in most cases, means greater student debt is one reason. An exponentially higher cost of living now than generations before and the disparity between wages also affect homeownership. Tighter lending criteria and limited housing supply are other factors.
In the mid-1970s, when Gen-Xers first entered the workforce, the average hourly wage was just over $24 (adjusted for inflation). Today, the average hourly pay for millennials is just under $28. It may seem like a slight improvement, but when one considers how the average cost of a home 50 years ago was about $160,000 (adjusted for inflation, again) compared to a record-high average of $720,000 now — a four-dollar increase per hour clearly isn’t enough.
Aside from financial changes, there’s also been a cultural shift. Indeed, most millennials have pivoted away from tradition, opting to commit themselves to establishing their careers and achieving a certain degree of self-fulfillment before settling down with a partner and starting a family. Before, the family unit was arguably the main goal for a working individual. As such, many Gen-Xers started their families at young ages, and thus saw an immediate need to buy homes. For millennials, however, between an economic recession and the arrival of a digital age, they either couldn’t afford to raise a family — and so denounced the idea altogether — or decided to put their career goals first and foremost.
This isn’t to say that millennials and Gen-Zers do not want to be homeowners. On the contrary, homeownership would, for many, effectively be a marker of financial and emotional stability, which — in a post-9/11, socially divided, politically restless, COVID-stricken, environmentally devastated, and egregiously expensive world — has otherwise eluded them.
Data has shown that more millennials are trading city-living for the suburbs. Urban city centres are proving to be overly crowded and expensive places to live in. With millennials — especially older ones — now looking ahead and making informed decisions about where they can afford to settle down, start a family, and support themselves, many look to migrate away from large cities. The Gen-X dream of a cozy house with kids and a dog running around the backyard rings true for millennials because for them, that’s precisely what they grew up with.
What needs to be done, then, is a systemic evaluation of the issue. Understanding why millennials can’t or aren’t buying real estate can provide possible solutions. For example, paying young workers a living wage, implementing student debt forgiveness, and creating down payment assistance programs can help. Constructing new housing units specifically for first-time and low-income buyers and limiting investor purchases on single-family homes can also allow millennials and Gen-Zers to take their first steps in homeownership in a way that doesn’t place them in financial peril.
At the very least, what must be expunged from the minds of the more conservative Gen-Xers is the idea that millennials and Gen-Zers are lazy, entitled, and want everything handed to them. The truth is these generations of workers, changemakers, and citizens have proven to be the most socially conscious demographic as they fight for equitable and actionable change.
Where some Gen-Xers might see the lack of millennial homeownership as the symptom of a self-interested and gadget-obsessed generation, millennials see an injustice. In that injustice, they see an opportunity — indeed, a mission — for systemic change. Systemic change and assistance from policy-makers might very well be the only ways they can get in on real estate.
For millennials and Gen-Zers, it’s more than just being able to own a home; breaking down the walls to homeownership in the present means that it might be easier for generations that follow to do the same.
Jericho Tadeo | Contributing Writer