StatsCan data reveals millennial wealth decline driven by real estate losses, unlike older generations
Statistics Canada data reveals a growing wealth gap between millennials and older generations.
According to the latest figures for the second quarter, millennial households saw their wealth decrease by 6.48 percent to $493,423 over the past year.
In contrast, the wealth of generation X, baby boomers, and pre-1946 households have continued to increase, with their net worths reaching $1,485,654, $1,397,609, and $528,699, respectively.
Millennials were also the only generation experiencing a drop in financial assets, which fell by 0.27 percent to $241,958 per household, while households overall saw a 5.32 percent rise.
As reported by Financial Post, the primary factor impacting millennials’ wealth is real estate, with millennial-owned real estate assets dropping nearly nine percent compared to a two percent decline across all households.
According to TD Bank economist Maria Solovieva, fluctuations in home values have hit millennials particularly hard. Many millennials purchased homes in 2020 and 2021 when interest rates were low, only to see home values decline after the first quarter of 2022.
The Canadian Real Estate Association reports that the benchmark home price has dropped from its March 2022 high of $852,000 to $713,200 in September 2024.
Older generations, who purchased their homes decades earlier, have seen their property values increase significantly over time.
Royal Bank of Canada economist Carrie Freestone noted that some millennials might hesitate to buy homes now, given high housing prices and interest rates, while others who bought homes when rates were low may face difficulties renewing their mortgages at higher rates.
“This is a group that is at a disadvantage,” Freestone observed, adding that while previous generations built wealth through real estate, many millennials and Gen Zs find themselves priced out.
Cindy Marques, a certified financial planner at Open Access Ltd. specializing in millennials, noted that financial setbacks are common for this generation, many of whom have faced two recessions, carry significant student debt, and struggle to secure high-paying jobs.
Marques mentioned that a surprising number of her millennial clients have recently experienced layoffs and are finding it challenging to secure new positions. Despite these setbacks, she has observed a positive shift in morale among clients who have chosen to cut costs and focus on saving.
Marques advises young people to prioritize saving and investing over purchasing a home, given the current barriers to entry in the housing market.
“The best time to start was yesterday and the next best time is today,” she said, emphasizing the potential of compounding interest. She calculated that a 25-year-old who begins saving for retirement can accumulate $250,000 more than a 35-year-old who saves the same amount over 30 years.
“It might be an unpopular opinion, but I have long been advocating for aggressively trying to save up in your earlier years to put a down payment on your financial freedom,” Marques said.
Marques believes younger Canadians may benefit from delaying homeownership until they are more established in their careers and have built stronger financial profiles.
She notes that millennials are increasingly exploring alternatives to traditional financial goals, such as travelling and pursuing flexible lifestyles.
“It’s less defeating for (younger generations) to see the math spelled out and realize homeownership isn’t for them,” she said, adding that many are choosing a lifestyle less bound by conventional ideas of wealth.
Data from Statistics Canada shows millennials are the only generation that has reduced consumption while increasing savings, a trend that Marques believes reflects millennials’ adaptable financial strategies.
“I don’t believe building wealth is out of the picture for (younger Canadians),” she said, encouraging early savings and investments to pave the way for future financial freedom.
For some, this might mean accumulating wealth through savings and investments rather than through real estate, a shift in approach that could influence the financial future of the millennial generation.
