Can’t buy a home? Here’s how to build your wealth outside the housing market
Global News
Housing has long been a go-to path to building wealth. But as the market slows and remains difficult to access, experts say there are options outside real estate.
The past year’s housing slowdown has dragged down the average net worth of many homeowners in Canada — especially the youngest Canadians stretching to enter the real estate market, data from Statistics Canada showed this week.
But with most Canadians relying on the housing market to build their wealth, experts say there are other ways households should be looking to save and invest for the future.
Canada’s cooling housing market saw the overall value of real estate decline 5.2 per cent between the first and second quarter of the year, StatsCan said, the first such reduction seen since 2018.
That especially hit younger Canadians (aged 25-34) hard, the agency explained, because this age group tends to tie more of its net worth to real estate than older generations who have more diversified portfolios.
The story many young Canadians are told — that they can buy a home and live in it while passively growing their wealth — has been an attractive tale that’s paid off for many generations, says Beata Caranci, chief economist of TD Bank.
She tells Global News that buying a home becomes something of “a forced-savings vehicle” as owners pay down their mortgage and the value of the home itself grows — a trend that’s largely been steady, save for the Canadian housing crash in the 1990s.
The dollar value of real estate aside, living in your own home provides a hedge against the cost of housing itself, whereas a renter might face sudden fluctuations in the market when they move from lease to lease, Caranci says.
“You’re living in it. And that’s something very unique to this type of wealth. So I think that has a double-win factor in the minds of Canadians,” she says.
