Homeownership Rates Show a Significant Drop for Millennials

Homeownership Rates Show a Significant Drop for Millennials

The landscape of homeownership in Canada is changing, and millennials are at the heart of this shift. nesto’s article, “The State of Housing for Millennials,” provides an in-depth look at these changes, exploring millennials’ challenges in the housing market and the factors influencing homeownership rates nationwide.

This article is a must-read for anyone interested in understanding the housing market’s current state, particularly for millennials. This insightful analysis could help you navigate its complexities. The post explores the nuances of homeownership rates, affordability, and the hurdles millennials face in the market. 

Big Picture

In Canada, housing affordability has seen significant deterioration. The National Bank of Canada reported a considerable decline in housing affordability in Q3 2023. This deterioration comes after improvements over 3 consecutive quarters, showing that many homeowners are struggling and others are unsure they’ll ever break into the housing market. Homeownership rates in Canada have significantly dropped from 69% in 2011 to 66.5% in 2021. This trend varies across provinces and generations, with millennials being particularly affected. Likely reasons include interest rates, housing prices, and the economy’s overall health. 

By the Numbers

The homeownership rate among the 25-29 age group has dropped from 44.1% to 36.5%, indicating a struggle to enter the market. In Canada, the real estate market has seen a considerable increase in home prices, with a more than 35% rise in just 4 years.

Province by Province

Homeownership rates have declined across all provinces, with some hit harder than others. Newfoundland had the highest rate in 2021 at 75.7%, while Quebec had the lowest at 59.9%.

Affordability 

Provinces with the highest homeownership rates are not the most economically affluent but the most affordable. New Brunswick, with an average home price of $239,900 in 2021, recorded a 73% homeownership rate. Restoring housing affordability is a complex issue that requires a multifaceted approach. It’s about making housing cheaper and making the housing market work better for everyone. Solutions to affordability challenges include balancing the structural lack of housing supply in the resale market with population growth that puts pressure on both the rental and housing markets.

Millennial Factor

Millennials are the most affected by these market trends, with homeownership rates for those under 40 falling below Canada’s average of 66.5%. Sacrifices by millennials include accepting smaller living spaces, living in less desirable locations, co-ownership (buying with friends), or even delaying homeownership altogether. These sacrifices are becoming more common as the cost of living rises. 

What’s Next

Rate cuts and a decrease in home prices could help millennials in 2024, improving qualifying and affordability while lowering mortgage payments. Check out our blog post for more details, and contact nesto’s mortgage experts if you’re ready to move forward with your homeownership goals.