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The impact of housing affordability on youth’s major life decisions

May 24, 2023

The second report This link will open in a new window. in a series on youth in Canada is here and I had the wonderful opportunity to sit down with Desjardins economists, Jimmy Jean and Randall Bartlett, to discuss its findings around rising home prices and affordability – or lack thereof.

A text by Fatima Raza, youth reporter for Desjardins

Migrating youth

Just as birds fly from places with fewer resources to areas with more opportunities, we are noticing a pattern in youth moving away from larger, pricier cities to more affordable areas.

In 2021 and 2022, Canadians aged 15 to 34 left Ontario in record numbers. Ontarian families are also increasingly settling farther away from larger cities like Toronto and housing affordability is a big driver.

Randall explains that a combination of sustained demand and lacklustre supply is driving rising home prices, “There are simply not enough houses for everyone, which is continuing to drive up the prices.”

With this shift we can only help but wonder what that means for our economy, and the cost is more than just financial.

“Younger adults are Canada’s innovators and future entrepreneurs. Them moving to more rural locations will weigh on the long-term dynamism of Ontario’s economy. At the same time, regions that had been subject to a prolonged period of economic decline are poised to become leaders in growth and innovation as people are drawn to their greater affordability,” he says.

On the other side, the young people who choose to stay in bigger cities often delay starting a long-term relationship and starting a family. Why? So that they can pay down student debt and save up for a home, often living with their parents to help with savings.

Avocados and iced coffee aren’t the problem

Youth are not spending poorly, the reality is that the housing market has a lack of adequate and affordable housing, and they are not to blame for that.

“Not only is housing affordability getting tougher and tougher for Canadian youth but certainly wages and incomes are not rising at a rate to support the costs,” says Jimmy Jean.

While Statistics Canada shows roughly 3 in 4 Canadian households fall into the group that has affordable housing (spending 30% or less of a household's gross, pre‐tax income) it is in part because roughly 3 in 10 homeowners are mortgage free or have made progress in paying it off. In contrast, youth who are new homeowners or renters are hit hardest by challenges around housing affordability. 

The Desjardins report finds that immigrant and visible minority youth in particular struggle with shelter affordability, many of which spend more than 30% of their income on shelter costs.“With the kind of rent levels that we're currently dealing with today, it's very difficult to stay under that thirty percent,” says Jimmy.

Randall adds, “We're blessed in Canada to have an immigration system that brings in a lot of economic immigrants. There's all this great talent coming in and certainly we don't want to see that a lack of affordability becomes a deterrent for us to attract the best and brightest that the world has to offer.”

Shrinking living spaces

More multi-family units such as apartments and condos are being built compared to other types of homes. However, many of these units seem to be built with the needs of investors in mind instead of the next generation of Canadians.

Condos are getting smaller, as these tend to be more profitable for developers and investors than larger units. And, as apartments and condos dominate new housing, this means either people will need to settle for smaller living spaces or move further afield to find larger housing that is affordable.

“These spaces are not conceived for the function of raising a family. They may be catering more to the young, professional early career sort of demographics but are not sustainable for the long term,” Jimmy explains.

Unfortunately, the “missing middle” in housing, such as townhouses and large apartments/condos, have been built much less frequently in recent decades.

How long can I live in my parent’s basement?

According to my parents, I should have moved out yesterday. But let’s be real – with the sky-rocketing prices of rent, I might be crashing down here a little longer. Sorry, Mom and Dad!

The report finds that 4 in 10 parents help their children financially to purchase a home.

In the first youth report, we noticed that more youth are pursuing post-secondary education and are landing jobs in fields that lead to good-paying incomes. They are also highly financially literate when compared to their international peers and past generations. Overall, they are doing a lot of things right.

There are things they can do on the margins but at the end of the day, it comes down to the need for a significant increase in the supply of housing.

What can be done?

Now, if we recall, many youth are already putting more than 30% of their income toward housing. The rest is for everything else.

The report revealed that with over half of young people’s spending going towards food, shelter, transportation and education, they are least likely to spend money on non-essentials.

“I think there's a greater role for the government to play in directing some of those investment dollars to build housing that is going to both support investment and ongoing housing supply, but also at the same time meet the needs of Canadians,” Randall adds.

While it is clear that youth have and will continue to face unique challenges, there is hope for a brighter future, and we can collectively work to keep making life better for the youngest members of the Canadian labour force.

This is why Desjardins continues to prioritize supporting youth and has developed initiatives like the upcoming Dream the Impossible event for young people between 18 to 30.

You can read the full economic youth report here This link will open in a new window. and can download the infographic here This link will open in a new window..