Is homeownership a mission impossible for young Canadians?

Updated: Nov 29, 2019

Why so many Canadians can’t afford to dream of homeownership and what needs to change?

A recent report published by the Generation Squeeze Lab in Vancouver, B.C. found that young Canadians between the ages of 25 and 34 continue to struggle with the dream of homeownership. The study found that a substantial gap exists between near-historic housing prices in major Canadian centers and relatively flat earnings this age group has faced for several decades. Here are some of the key findings broken down.


According to the Canada Mortgage and Housing Corporation (CMHC) Canadians can’t spend more than 30% of their pre-tax earnings on a home for it to be considered affordable. For young Canadians, the only way affordability can be restored is for either home prices to drop or for their earnings to rise.

According to Generation Squeeze, this is no easy task despite the fact the CMHC has set a target designed to help all Canadian residents afford a home suited to their needs by the year 2030.

The reports note the following changes would have to be made:

  • The average home price in Canada would have to fall to about half the average housing price (about $223,000) OR

  • Full-time earnings would need to almost double the average typical earning to $93,400/year

If you look at the cities with the highest home prices, their numbers seem just as unreachable:

  • In Metro Vancouver, the home price would have to fall by about three-quarters of the current value (to about $795,000) OR full-time job earnings would need to quadruple the typical current levels (to $200,400/year)

  • In the Greater Toronto Area, the home prices would need to fall to two-thirds the current value (about $523,000) OR full-time earnings would need to triple the typical current levels (to $150,000/year)

  • In Montreal, the average home prices would need to fall by 35% of the current value (to $131,000) OR full-time earnings would need to increase by over 50% (to $72,400/year)

These are substantial changes that are hard to achieve.


Generation Squeeze reported the average person took about five-years to save the money for a 20% down payment forty years ago. Today, a young Canadian takes 13-years to save a 20% down payment for the average priced home. This number varies based on the area. For example, in Metro Vancouver where housing prices are so high, it would take 29-years, while in Charlottetown or Fredericton it would take just six-years, not so far off from the average 40-years ago.


As mentioned, Generation Squeeze and the CMHC are working towards widespread housing affordability by 2030. The main challenge is this will take effort from all levels of government.

The governments face the impossible task of finding a way to reduce housing-sized costs for young Canadians while also meeting the challenge of providing affordable housing.

Research shows that reducing non-housing costs for young people, newcomers, and older renters can ease the challenges of having safe, affordable housing. This would include:

  1. New Mom and Dad Benefits so parents, including the self-employed, have the time and resources to stay home with their newborns until children are at least 18-months old.

  2. A $10 a day childcare service so parents can afford enough employment time to manage the rising cost of housing and flat household incomes.

  3. Flextime for employees and employers so the importance of family support can’t be ignored.

The changes must be designed to help both renters and potential homeowners.


The policy recommendations made by Generation Squeeze is long and detailed. Here’s the gist of it:

Align rents with local earnings

By leveling the playing field between rent and the average local earnings, homeownership will be within closer reach for young people. As well, a better housing system will help accommodate the growing number of people who must rent their homes for longer periods or indefinitely. This would include more purpose-built rental housing as an important housing strategy for urban centers.

Capture wealth windfalls

Increased home prices in some regions have created a population of “housing lottery winners” which is outpacing changes to tax systems. Federal estimates show that non-taxation of capital gains from principal residences will cost the feds about $6 billion in 2019 and there will also be corresponding losses to provincial coffers. These tax shelters have turned housing in Canada into a commodity.

Stimulate earnings

Real estate, rental, and leasing is the largest driver of the Canadian economy, yet it generates just 2% of employment. This is the largest gap of all industrial sectors between its share of GDP and the share of employment. As a result, although we are growing our economy by increasing the major cost of living, we aren’t generating jobs in that industrial sector. Because of this gap, we can’t ensure local earnings keep pace. This is most evident in urban centers.

Protect homeowners from a decline in home prices

Realistically, local earnings won’t rise enough to restore housing affordability in many major urban centers. That means our housing system will have to consider a drop in home prices in the next 10-years after adjusting for inflation. So, it is crucial that Canada’s National Housing Strategy has new measures to “de-risk” the market. This way home costs can come down to support all Canadians, while current homeowners are protected from a decline in property value.

Protect affordability where it exists

Since less than 10% of Canada’s population lives in markets that have not yet experienced the same gap between local earnings and home prices, areas such as Saskatchewan, Manitoba and the Maritimes should take a lesson from areas currently suffering from this gap. Measures have to be taken by the National Housing Strategy to prevent this from happening in these regions.

These policies work hand in hand with the four-part housing policy.


A four-part housing policy has been created by Generation Squeeze and the Housing Research Collaborative. They encourage each political party to commit to taking “meaningful action on housing affordability.” Parties’ housing policies should include:

  1. Addressing factors in the broader housing market that have contributed to home prices leaving behind earnings in many regions of Canada.

  2. Adopting the CMHC goal and timeline to ensure all Canadians can afford a good, secure home by 2030.

  3. Embracing the principle of “Homes First” so housing is treated as a place to call home first and foremost in Canada.

  4. Enacting policies that address both demand-side and supply-side challenges and solutions, rebalancing the tax treatment of earnings and housing wealth and scaling up non-profit housing.

Generation Squeeze notes that without government commitment, young Canadians will not see affordability by 2030.

You can read the full Generation Squeeze report here.

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