What young people can do when homeownership seems out of reach

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Despite the $3,000 rent on his two-bedroom condo, Zakary Wexler has a plan. The 29-year-old financial advisor with WEALTHinsurance.com in Vaughan, Ont. and his wife are setting aside several hundred dollars a month toward a down payment on an investment property they plan to rent out.
“I would like to have $80,000 to $100,000 down and, so far, we’re on track for that,” he says, adding that they plan to buy in six to 10 years. “Renting was always part of the plan – it’s working out for us.”
While Mr. Wexler is focused on obtaining passive income from an investment property right now, he and his wife would also like to buy a home of their own down the road.
With sky-high rents in cities across Canada, many Canadians are struggling to find ways to save enough for a home – or abandoning the dream of home ownership entirely. Some young people are borrowing from family members for down payments, while others are turning to advisors for financial strategies on how to save enough and hoping house prices plateau.
Jim Pan, a fee-only, advice-only certified financial planner with Panorama Advisory Group in Vancouver, works with many clients in this situation. He looks at how a client plans to use the property, how much debt they can handle, their long-term cash flow and what direction interest rates are going. Then, he takes a hard look at their lifestyles.
“It all comes down to lifestyle changes,” he says. “Is there something we can adjust?”
The average rent in Canada was $2,181 in April, according to Rentals.ca. In North Vancouver, the most expensive region in the country, the average for a one-bedroom apartment was $2,704.
Those rents are taking a big chunk out of the savings of would-be homebuyers at a time when they need higher incomes to qualify for mortgages.
According to a Royal Bank of Canada (RBC) report released last month, renters spent almost 9 per cent more than they earned in household disposable income last year, while homeowners saved 7 per cent of their take-home pay.
“Lower earnings and higher allocations to housing make it exceptionally difficult for renters to save for a down payment – a crucial step in the path to wealth accumulation,” the RBC report states.
As a result, only 45 per cent of households could afford to buy a condo in 2023 based on their income – down from almost 60 per cent in 2019 – and only 26 per cent could afford a single-family home, according to the RBC report.
That reality has led some to rethink their dream. In cases in which a person’s income is insufficient and will lead to an underfunded retirement, “owning a home shouldn’t be the ultimate goal,” Mr. Wexler says.
Mr. Pan, for his part, says he “would make amassing wealth the primary goal.” And while a home can build wealth, “the purpose of an asset is to provide passive income, whether it’s from rental properties or liquid investments.” Holding equities for the long term can often outpace growth in real estate, he adds.
For those still intent on buying, advisors are walking their clients through several funding options.
Mr. Pan says if someone can’t save fast enough, they should consider a part-time job to augment their income – the proceeds of which can be invested in a high-interest savings account (HISA) or guaranteed investment certificate (GIC).
“A GIC or HISA makes a lot of sense right now as you can get between 4 per cent and 5.7 per cent in interest,” he says.
Mr. Wexler says he advises his clients to ensure they don’t park their savings in vehicles that are too aggressive – even in scenarios in which they plan on buying in 10 to 15 years. “Don’t chase unicorns,” he advises.
He’s shifted his equity holdings into passive exchange-traded funds, with a small amount in actively managed funds that have fees of less than 1.5 per cent. He is also using a tax-free first home savings account.
Some clients may have to adjust their lifestyles, Mr. Pan says, beginning with meal-delivery services.
“It’s very dangerous,” he says. “I tell my clients, ‘Meal prep more.’” He says by cooking at home, a couple can save $300 to $400 a month easily.
For Mr. Wexler, the big change was in mindset. The couple pays off all debt from credit cards and student loans each month, has stopped “immediate gratification” expenses, has cancelled many of its streaming services and now uses credit cards and insurance products that have lavish reward programs.
“In 2024, we probably saved $3,500 on things we would have formerly spent on,” he says. “It’s all about safer, calculated decisions.”
Elke Rubach, a certified financial planner and founder of Rubach Wealth Holistic Family Advisors in Toronto, says many renters should take heart in the fact their salaries will likely increase over time, with lifestyle adjustments helping to augment their savings.
“People need to see real estate as a long-term, patient investment,” she says.
Would-be buyers should also be open to alternative arrangements when they buy a home. While some of her clients head to the Bank of Mom and Dad, others are being innovative, finding roommates to share the rent and investing what they save in rent for a future down payment.
Others are planning to purchase properties jointly, sharing mortgage payments, maintenance fees and taxes.
Ms. Rubach says one client recently co-purchased a home, with a couple living on the main floor, the other in the basement and the top floor rented out.
“It’s all about discipline and patience,” Ms. Rubach says. “It’s going to take years – and it’s a good idea to be creative.”
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