Which Generation Is Most Likely to Buy a Home in Canada?

Homeownership is a significant milestone for many individuals, symbolizing stability, investment, and the fulfillment of the Canadian dream. However, as the housing market evolves and economic conditions fluctuate, the question arises: Which generation is most likely to buy a home in Canada? To glean a better understanding, it is necessary to delve into the patterns and factors influencing homeownership among different generations.

Each generation brings unique characteristics and experiences that shape their approach to the housing market. Baby boomers, who have benefited from relatively affordable prices during their entry into the market, are now contemplating downsizing or exploring alternative housing options in their progressing retirement years.

Generation X, currently in their prime earning years, may be actively purchasing homes or upgrading to larger properties. Meanwhile, millennials face challenges such as soaring housing prices and student loan debt repayment, but as they progress in their careers and build financial stability, they are gradually entering the real estate market.

As for Generation Z, the youngest group of potential homebuyers in Canada, many are still in the early stages of their careers or education, with homeownership being a distant consideration. However, as they establish financial stability and embark on significant life milestones, they should play a substantial role in shaping the future of the Canadian housing market.

Canada Home Ownership Trends

In the first quarter of 2023, the percentage of median household income allocated to homeownership costs in Canada dropped by 1.6 percentage points to 59.5 percent, offering a modest respite from the burden faced by homeowners. Although the decline is not significant, it marks a departure from the consistent climb observed since the beginning of 2020 and can be attributed to the Bank of Canada’s decision to pause rate hikes.

According to a report by RBC economists, the stabilization of mortgage rates resulting from this recent policy shift contributed to the reduction in ownership costs associated with home purchases. However, despite this welcome development, the easing of ownership costs has barely made a dent in reversing the substantial loss of affordability experienced since mid-2020.

The report emphasizes that owning a home remains an “impossible” dream for middle-income households in expensive cities such as Vancouver, Victoria, and Toronto, while also remaining challenging in Montreal, Ottawa, and Halifax, albeit to a lesser extent. Although housing prices have declined, the demand-supply imbalance makes it difficult for many prospective buyers to find suitable properties, with an increased number of listings but insufficient availability.

So what does this mean for the various generations of Canadians? Well, baby boomers, in their retirement years, may consider downsizing due to the slight relief in ownership costs. Gen Xers, in their prime earning years, could benefit from improved affordability to upgrade or make strategic real estate moves. While the small decrease in ownership costs is a welcome development for millennials, it may not drastically change their affordability landscape.

Gen Z, just starting their careers, may find a slightly more balanced market with increased options when they are ready for homeownership. However, sustained and substantial improvements in affordability would be needed to significantly impact homeownership rates across these generations.

Which Generations Are Buying a Home in Canada?

According to a generational trends report by Mustel Group and Sotheby’s International Realty Canada, members of the baby boomer, Generation X, millennial, and Generation Z cohorts share a confident belief that owning a home is a sound financial investment. The report reveals that 49 percent of respondents expect a home purchase to yield similar or better returns than other investments in the next 12 months. Additionally, 60 percent of participants have a positive outlook on real estate’s performance in the long term, predicting that property will match or outperform other financial investments over the next ten years.

The survey findings indicate that Canadians across all age groups are enthusiastic about entering the housing market, with the pandemic potentially accelerating homeownership dreams. A notable 35 percent of respondents express a higher likelihood of purchasing a house than they did in January 2020. Moreover, homeowners are displaying an increased eagerness to sell, as one-third of homeowners state that they are more inclined to list their properties within the next five years compared to pre-pandemic times.

Baby Boomers

Baby boomers, nearing or in retirement, are considering downsizing or exploring alternative housing options. The slight easing of ownership costs in 2023 may provide an opportunity for them to make changes to their living arrangements while maintaining homeownership. Their extensive experience in the housing market and accumulated wealth could enable them to take advantage of favorable conditions and potentially unlock equity through strategic real estate decisions.

Gen X

Gen Xers could benefit from improved affordability to upgrade or make strategic real estate moves. The modest decline in ownership costs might encourage some Gen Xers to enter the housing market or consider moving up the property ladder. With financial stability and more significant savings compared to younger generations, they may seize opportunities presented by a slightly more balanced market to fulfill their homeownership aspirations.

Millennials

Millennials have faced challenges in attaining homeownership, but the slight decrease in ownership costs offers a glimmer of hope. While affordability remains a concern, improved affordability in 2023 might motivate some millennials to enter the housing market. As they progress in their careers and build financial stability, they can seize the small window of opportunity to achieve their long-awaited homeownership goals and establish roots in the real estate market.

Gen Z

Gen Z, the youngest generation entering the housing market, is just beginning to establish their careers and financial stability. While affordability remains a challenge, the ongoing trends in ownership costs could shape their future decisions. The availability of more listings and a slightly more balanced market may provide Gen Z with a wider range of options when they are ready to consider homeownership. As they advance in their professional lives and navigate the evolving real estate landscape, Gen Z individuals can take advantage of favorable conditions to embark on their own homeownership journeys.

So Which Generation is Most Likely to Buy a Home?

Millennials are the generation most likely to buy a home in Canada. Despite facing challenges such as high housing prices and student loan debt, millennials are progressively entering the real estate market. As they advance in their careers and build financial stability, homeownership becomes a priority.

Additionally, government incentives and programs aimed at supporting first-time buyers have increased their opportunities. While baby boomers and Generation X have traditionally had higher rates of homeownership, Millennials, born between 1981 and 1996, are emerging as a dominant force in the housing market. With determination and adaptability, they are reshaping the landscape of homebuying in Canada.

Conclusion

In conclusion, the journey to homeownership is distinctly unique for each generation, shaped by differing life stages, economic climates, and socio-cultural factors. As the housing market continues to evolve, understanding generational influences and trends will be crucial to forecasting its future direction for real estate agents and i
 

Alice Yang