The outlook for hopeful first-time homebuyers isn't getting much better
Young Canadian households have accumulated wealth at an unprecedented pace since 2020, nearly doubling their net worth in just four years.
But beneath this surface prosperity lies a troubling reality: their incomes have barely moved, raising critical questions about the sustainability of their financial positions and what it means for mortgage origination.
According to analysis from Rachel Battaglia, an economist at RBC, the disconnect between wealth and income for younger Canadians reveals a market built on temporary supports rather than earnings growth.
"Young household wealth gains since 2020 came despite stagnant incomes, suggesting factors beyond earning capacity—such as pandemic government transfers, asset appreciation, and potentially family support—played a meaningful role in driving wealth accumulation," Battaglia said.
Employment weakness reveals the real constraint
Sluggish employment compensation growth—the primary earnings source for under-35 households—has become the primary headwind.
Young workers remain disproportionately concentrated in vulnerable sectors like retail, hospitality, and food services, industries hit hardest by economic shocks.
Households under 35 experienced disposable income growth of just 18% between the first quarter of 2020 and the second quarter of 2025, trailing their 45-55 year-old counterparts by 16% points and falling short of national averages.
More concerning, young Canadians remain the only age group whose income growth has failed to keep pace with inflation. Meanwhile, former Canadian Imperial Bank of Commerce CEO Victor Dodig previously called for urgent policy action to support younger Canadians.
Real estate and financial assets drove most wealth gains, bolstered by pandemic-era government support like CERB and stock market appreciation.
Young households also slashed mortgage debt during the ultra-low rate environment of 2020-2021, though this reflects a more complex shift: reduced home buying activity due to affordability constraints. In Ontario, the average first-time buyer age climbed from 38 to 40 between 2019 and 2024.
What it means for mortgages
The risks are mounting. "The disconnect between income and wealth for young Canadians raises important questions about their financial security as housing and equity markets normalize and the boost from earlier government support continues to dissipate," Battaglia said.
Early signs of erosion already appear, with wealth accumulation slowing in recent quarters for under-35 households more than any other age group.
For the mortgage industry, this signals cautious headroom for growth. While younger cohorts hold substantial equity positions from pandemic-era appreciation, stagnant incomes constrain their capacity to service new debt or accumulate additional assets through earning power.
A national survey by Wahi found that young Canadians feel much more pressure to buy a home than earlier generations did. Societal expectations are the primary source of this pressure for Gen Z (59%) and millennials (55%), a marked difference from Gen Xers (33%) and baby boomers (33%).
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