Millennials’ wealth has been falling further behind other generations, according to Statistics Canada.

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Over the past year, millennial households have seen their wealth drop 6.48 per cent to $493,423 per household, according to the latest Statistics Canada data for the second quarter.

In comparison, generation X, baby boomer and pre-1946 households became even wealthier, with their net worth growing to $1,485,654, $1,397,609 and $528,699, respectively.

Millennials were also the only generation that saw their financial assets decline, slipping by 0.27 per cent year-over-year to $241,958 per household, compared to all households, which saw a 5.32 per cent increase.

What’s driving millennials’ wealth gap?

It is primarily real estate that has caused millennials’ net worths to tumble, experts say. The data showed millennials’ real estate assets have plunged nearly nine per cent since last year, compared with the two per cent drop across all households.

Maria Solovieva, an economist at Toronto-Dominion Bank, pointed to recently changing home values having a disproportionate impact on millennials.

For example, those who purchased homes when interest rates were low, in 2020 and 2021, have seen their homes’ values decline since the first quarter of 2022. The most recent data from the Canadian Real Estate Association showed the benchmark home price fell from a peak of $852,000 in March 2022 to $713,200 in September 2024.

Meanwhile, older Canadians who have owned their homes for decades have seen their properties skyrocket in value over a much longer period.

Carrie Freestone, an economist at Royal Bank of Canada, said millennials who aren’t already homeowners might be reluctant to enter the housing market right now, given relatively high housing prices and interest rates. Others who purchased property when interest rates were incredibly low could be looking to sell as their mortgages come up for renewal and find they are unable to afford payments at higher rates.

This is a group that is at a disadvantage

Carrie Freestone

“This is a group that is at a disadvantage,” Freestone said, explaining that previous generations have typically relied on assets like housing to build wealth and serve as their nest egg, but many millennials and Gen Zs are finding themselves priced out.

“There really still is no investment vehicle equivalent to homeownership in Canada,” noted Freestone, adding the “special sauce” would involve building wealth through both real estate and the stock market.

Cindy Marques, certified financial planner and director at Open Access Ltd. who specializes in working with millennials, isn’t surprised that millennials are lagging in terms of wealth. This is the case particularly those who experienced two recessions, are still burdened with student debt and are unable to enter the housing market or land a high-paying job.

She said an unexpectedly large number of her millennial clients have been laid off from their jobs and are having a tough time finding work right now, as well.

Still, Marques said she has seen a turnaround in morale for some of her working clients, especially those who have been willing to cut costs where needed for the sake of saving aggressively.

Statistics Canada data showed millennials were the only generation to cut back on consumption while ramping up on savings as well.

“I don’t believe building wealth is out of the picture for (younger Canadians),” Marques said.

Aggressive early saving can results in thousands more dollars

She suggests young people should consider investing their money and saving for retirement earlier — and leaving homeownership for later in life, considering how high the barrier to entry is in today’s housing market.

“The best time to start was yesterday and the next best time is today,” said Marques, emphasizing the power of compounding interest. According to her calculations, a 25-year-old saving some of their take-home pay in just a 10-year period can end up with $250,000 more by the time they turn 65, compared with a 35-year-old who saved the same amount of money but throughout 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, i.e. retirement or the ability to live life on your own terms, before buying a home,” explained Marques.

“You have $100,000 by the time you hit 30 and you let that grow, that’s going to result in substantial assets by the time you’re looking to retire or do something different with your life.”

Marques believes it makes more sense for younger Canadians to consider purchasing property once they are more settled in their careers and have accumulated more wealth and their credit looks better to a prospective lender.

“It’s less defeating for (younger generations) to see the math spelled out and realize homeownership isn’t for them,” she said. She added that younger Canadians are feeling less constrained by the ideals of prior generations and are opting to spend their money in other ways, like travelling the world and living a more nomadic lifestyle.

• Email: slouis@postmedia.com

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