The Elusive Homeownership Dream: Canada’s Widening Wealth Gap Revealed
Owning a home is frequently viewed as
symbol of success
And it is associated with numerous life milestones, such as establishing a household or increasing one’s assets. Owning property is frequently viewed as the pinnacle of residential aspirations, whereas renting is typically considered temporary. Ultimately, people are generally anticipated to progress along the housing continuum from tenants to homeowners.
Fostering homeownership is thus at the heart of housing policy in
many countries
, including Canada.
By 2021, 67 percent of Canadian homes were owner-occupied.
.
Nonetheless, declining affordability over the past few years has made homeownership unattainable for numerous individuals.
called into question
The concept of owning one’s own home.
In a recent study
My colleagues and I analyzed homeownership accessibility for various demographic groups utilizing census data spanning from 1986 to 2021 across five major urban centers: Montreal, Toronto, Calgary, Edmonton, and Vancouver.
Our research indicates that for numerous people, purchasing a house has turned into an unattainable aspiration.
Stagnant homeownership growth
Using statistical models that factored in various personal and household attributes, our analysis revealed that the chance of an average Canadian family possessing a home—whether mortgaged or not—increased gradually between 1991 and 2011. However, this trend reversed with declines observed in both 2016 and 2021. Notably, the odds of homeownership involving a mortgage notably rose during these years. Consequently, the expansion in overall home ownership can largely be attributed to higher levels of mortgage indebtedness.
This trend coincided with a change that began in the 1990s.
financial practices that viewed housing primarily as an investment opportunity
than a social good.
The national administration ceased financial support for social housing initiatives, privatized the Canada Mortgage and Housing Corporation (CMHC), and enlarged its mortgage securitization activities.
To put it differently, mortgage liberation effectively boosted homeownership for a period up until 2011.
In all five major urban centers, the count of renting households decreased up until 2011 (or 2016 for Montreal). After this period, these numbers started to rise again. Additionally, owning property without a mortgage has gradually become less common over time.
These results contradict the anticipated continuous increase in homeownership that was meant to be brought about by commodification and financialization.
Filtration process and availability of credit
A further belief within the homeownership narrative posits that a free market offers equitable chances for property acquisition via two mechanisms: the filtration mechanism and the loosening of mortgage regulations.
The filtering model
implies that houses constructed for high-earning households gradually decline and lose value over time, potentially becoming accessible to low-income individuals. When combined with greater mortgage availability, this trend is anticipated to ultimately provide homeownership chances to everyone.
However, this mechanism is
less likely to work
For homeownership compared to rentals, owner-occupied homes frequently take an extended period, occasionally spanning decades, before their value decreases. When these properties finally become accessible and budget-friendly, they might necessitate significant and expensive refurbishments.
In reality, numerous owner-occupied units frequently ”
filter up
instead of moving downwards, through processes like gentrification or takeover by financial investors.
Enhanced mortgage accessibility doesn’t help everybody. Numerous individuals with lower incomes or unstable employment often find themselves ineligible for mortgages, and as a result,
racialized people
are more prone to have their credit applications rejected because of discriminatory practices.
Growing inequalities
Supporting these counterpoints are increasing disparities in homeownership between different generations and income levels. Until 2021, all age brackets experienced enhanced opportunities for owning homes. Nonetheless, individuals aged less than 45—specifically those within the ranges of 15-24, 25-34, and 35-44—have witnessed consistent decreases in their rates of homeownership.
These individuals were largely millennials and members of Generation Z, experiencing a notably higher level of financial strain compared to their elders.
Older homeowners above the age of 55 are grappling with cost-of-living challenges as well. Our analysis revealed that the proportion of homeowners within this demographic carrying a mortgage increased from 1986 to 2021. Specifically, among those aged 55 to 64, the percentage climbed from 24% to 40%. For individuals between 65 and 74 years old, it went up from 10% to 26%.
In other words, more individuals have to depend on this.
biggest loans and extended repayment terms
To purchase and upkeep their residences, making it more difficult to repay their home loans prior to retiring.
The differences in access to homeownership opportunities
Various income levels have likewise gone up.
During the period from 2011 to 2016, only the highest quintile income group saw an increase in the likelihood of homeownership, whereas individuals in other income brackets faced stable or reduced opportunities for owning a home.
Across homeowner households, Canadians from various income levels experienced an uptick in mortgages between 1996 and 2016. While the lowest-income bracket witnessed the most rapid increase in mortgage-holding, they remained the least probable to be homeowners through this method because of their limited finances or potential discriminatory practices. Escalating property values along with relaxed rules for granting mortgages might have contributed to driving more individuals, particularly those with lower incomes, towards taking out mortgages.
Higher social status?
The concluding persuasive story suggests that owning a home leads to greater well-being and financial safety because of increased perceived social standing and a heightened feeling of independence and steadiness.
The financial stability linked to owning a home is bolstered by the concept of “
housing asset-based welfare
This framework views homeownership as a strategy for youth to accumulate wealth for their future financial stability during emergencies and retirement.
Nevertheless, this method promotes accumulating debt at an earlier stage of life and might succeed only if mortgage loans stay reasonably priced until fully repaid. Ironically, this focus on building assets fuels speculative investing and pushes up housing costs, thereby complicating the possibility of owning a home outright and making mortgaged ownership less within reach.
The benefits of homeownership for one’s wellbeing are also questionable.
My coworkers and I have demonstrated this previously.
The supposed advantages for an individual’s welfare aren’t inherently linked to owning a home. Instead, these perks are generated and upheld by a societal framework that renders homeownership safer and more attractive compared to options such as leasing.
Actually, the financial stability linked to owning a home
has been undermined
Due to increasing housing expenses, particularly affecting low- and moderate-income homeowners who have mortgages.
Homeowners whose incomes fall below the median experienced a 25 percent greater rise in housing expenses compared to their income growth during the study duration. In contrast, those at the upper 60th percentile of income saw only a five percent increase in their housing costs relative to their earnings.
Broken promises
Professor Manual Aalbers, who specializes in human geography at Belgium’s University of Leuven, has contended
Today, homeownership has gradually shifted from being a policy objective to mere rhetoric—a tool used for broader purposes. The act of owning a mortgaged home is now more about sustaining mortgage and financial markets than achieving a social goal.
At best, the unfulfilled pledges regarding homeownership highlight the shortcomings of our present housing system, which establishes a ranking among tenure types.
Two levels of societal hierarchy
— homeowners and renters.
Policies
Measures aimed at fostering a more equitable housing market are crucial. This involves enhancing accessibility to homeownership through a wider variety of affordable housing options and reducing incentives for speculative buying.
These policies should likewise incorporate improved housing stability and chances for renter wealth accumulation, along with support.
the role of non-profits
And social enterprises in addressing the requirements of various income levels.
The research initiative received financial support from the Social Sciences and Humanities Research Council of Canada (SSHRC), specifically via their Insight Development Grant and Partnership Grant programs. This particular study formed part of the broader Community Housing Canada project, which also saw contributions from both CMHC and SSHRC.