In 2021 in Toronto, just over 40 per cent of millennials aged 25 to 39 owned homes, compared with just under 50 per cent of baby boomers the same age in 1991. The numbers were similar in Vancouver, according to the report.Cole Burston/The Globe and Mail
Canadian millennials are entering the housing market later and putting off having a family because of affordability challenges and societal changes, according to a study from Statistics Canada.
The study, Millennials in the Canadian housing market, was conducted using census data from 1991, 2006 and 2021. Researchers examined how home-ownership rates and family formations changed for baby boomers, Gen Xers and millennials when each group was between the ages of 25 and 39.
It found that millennials had the lowest rate of home ownership during that age span, at around 50 per cent, compared with close to 56 per cent for Gen Xers and baby boomers.
Millennials are also having kids later than baby boomers. In 1991, around 55 per cent of people between 25 and 39 years old were parents, compared with about 40 per cent in 2021.
The difference in home ownership between those cohorts was more stark in large cities such as Toronto and Vancouver, where housing affordability has long been a challenge.
In 2021 in Toronto, just over 40 per cent of millennials aged 25 to 39 owned homes, compared with just under 50 per cent of baby boomers the same age in 1991. The numbers were similar in Vancouver.
According to the Canadian Real Estate Association, the average home price nationally in March was more than $673,000. In Toronto, it was $1.07-million and in Vancouver it was more than $1.1-million.
Michael Mirdamadi, one of the study’s author’s, said that while affordability was a factor, the postponement of major milestones was also at play.
“We couldn’t chalk it down entirely to affordability,” he said, adding that pushing back major life milestones, especially in Toronto and Vancouver, where young people are more likely to live with their parents for longer, was also a factor.
The study also found that in 1991, 16 per cent of 25- to 29-year-olds lived with their parents, compared with 31 per cent in 2021.
Robert Kavcic, a senior economist at Bank of Montreal, agreed with the report’s findings, saying the decline in home ownership was the result of housing affordability challenges, which he said is temporary, as well as broader, societal changes, which are more permanent.
Mr. Kavcic pointed to people staying in school longer and having kids later.
Another societal shift noted in the Statscan report is that younger people are living with their parents longer than previous generations did.
Affordability is a “cyclical factor. You see this over time – the late eighties through the 1990s. You see it again right now. The market will normalize itself,” Mr. Kavcic said.
Benjamin Tal, an economist at Canadian Imperial Bank of Commerce, disagrees. “Despite the fact that prices are going down, this cyclical slowing in the housing market will not solve the affordability crisis,” he said. He added that housing affordability challenges were caused by a supply shortage and societal changes.
According to the study, Ottawa-Gatineau, Calgary and Edmonton have higher rates of home ownership than other parts of the country. The rate in those cities stayed consistent between 1991 and 2021 for those aged 25 to 39.
These are more affordable options that could benefit millennials, says Mike Moffatt, founding director at the Missing Middle Initiative, a think tank that studies and advocates for Canada’s urban middle class.
“Younger people have increasingly been leaving the GTA, the Greater Vancouver area, to go to places where housing is more attainable for middle-class families.”
He says this trend will continue. “Particularly Edmonton and Calgary continue to attract a lot of young families.”
Mr. Moffatt is encouraged by recent moves by various levels of government to improve affordability, pointing to the federal government’s deal with Ontario to eliminate the HST on new homes under $1-million and Ontario’s reduction of real estate development charges as examples.