Last week, we went into detail, including conducting a survey, to better understand why many young Canadians are holding off on buying homes. The evidence in the market is clear - property listings are up but purchase transactions are down.In general, people aren’t becoming homeowners like they used to. The evidence there is also very clear - home ownership as a percentage of the population has decreased. For many Canadians, the aspiration of owning a home in Canada someday remains a distant dream. While for many members of older generations the prospect of homeownership was simply seen as the next stage in life, like going to school, getting married, and having kids, the prospect for younger generations is much more bleak. Last week we focused on members of the younger generation’s hesitation about buying a home given how many of us have been priced out of the market. Today, let’s talk about the general trend of declining home ownership across all the generations in Canada.It is relevant to mention that the biggest decline in home ownership overtime has occurred among younger generations. Think about your parents; when Gen-Z’s parents or grandparents were in their 20s, they were statistically more likely to have purchased a home. The home ownership rate for people aged 25-29 decreased from 44.1% in 2011 to 35.5% in 2021. In general, however, the overall ownership rate went from 69% in 2011 to 66% in 2021. Statistics Canada has a map of the varying ownership rates across the provinces.&nbsp;<figure class="image image-style-align-center"><img src="https://files.rifo.co/CompanySite/186/186_image.png"></figure>The graphic here shows a decrease in dwellers who own their home and an increase in renters.&nbsp;Statistics Canada also reports a decline in ownership for all age groups. Aside from the decline in 25-29 year old owners described above, ownership for Canadians aged 30-34 decreased from 59.2% to 52.2%. For those aged 70-75, the rates decreased by 0.7% with the rate decreasing from 75.5% to 74.8%. This is not a good thing. Home ownership and private property rights are fundamental to Canadian society. It also supports the structure of our economy and allows for a reasonable retirement. We need to reverse this trend and return the general public to the first position of wealth creation and wealth management. As we have said many times before, this means dramatically lowering taxes, lowering government spending, and restoring personal freedoms and responsibility to the individual rather than the government.&nbsp;The main driving factor for home ownership decreases for young people is simply the unaffordability crisis. I used to joke with my grandparents that they bought their house for two goats and I’d have to win the lottery to buy one of my own. However, when we expanded our survey from last week to include all demographics, we see that the reasons for a decrease in market activity changes. Affordability is not the number one issue with older Canadians.&nbsp; They are concerned with three primary and two secondary issues. It is these factors that are keeping them on the sidelines. Thay rank as follows:<ol><li style="text-align:justify;">&nbsp;Risk of further price declines, especially given the need for many existing homeowners to refinance in 2025 and 2026</li><li style="text-align:justify;">Recession leading to job loss</li><li style="text-align:justify;">Interest rates, inflation, taxes, and the carrying cost of home ownership has skyrocketed</li><li style="text-align:justify;">The buy versus rent economics are less compelling than they once were</li><li style="text-align:justify;">Changes in immigration policy and profile</li></ol>It is interesting to see how these concerns are changing the way people transact. In the past several years it had become standard practice to buy your new home before you sold your existing residence. Essentially, you could “free ride” on the price increases that were inevitable. This is no longer the case. Most will now wait until their existing house is sold before they buy the upgrade. The risk of the house prices running away has vanished and been replaced be the worry that you could be holding two falling properties at the same time.Given the first three concerns, one would think that interest rate cuts would be an intelligent action. The only challenge to that is inflation, however, government spending reductions and tax cuts could help solve that problem. This said, the Canadian government just committed another $5 billion to foreign aid, so we are not hopeful on this front. Natural forces should bring the buy versus rent economic into line.Some realtors argued that Canada’s housing prices wouldn’t fall because of strong immigration. What was overlooked is the evolving nature of immigration itself. The shift away from highly skilled, wealth-generating immigrants has strained infrastructure without the expected economic benefits.It’s understandable that many young Canadians feel excluded from homeownership opportunities. This reality calls for coordinated policy shifts, in government spending, taxation, and immigration, to ensure the country’s wealth is accessible to all.Without decisive action, many Canadians will face the prospect of affordable housing only in distant suburbs or small towns, far from urban centers.

Canada’s Homeownership Challenge: What’s Holding Us Back and How to Fix It

Homeownership rates are falling across Canada, especially among young people. A closer look at what’s driving the trend and what needs to change.

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