Housing affordability is usually discussed in terms of prices and supply. But a recent working paper, highlighted in a Globe and Mail column by Preet Banerjee, raises a more unsettling question.
What happens when young people stop believing they will ever own a home?
The research suggests the effects go well beyond delaying a purchase. When renters begin to see ownership as permanently out of reach, their behaviour shifts. They consume more relative to their wealth. They reduce work effort. They become more likely to take on high-risk investments, what the authors describe as a form of “gambling for redemption.”
At first glance, that sounds counterintuitive. You might expect higher prices to push people to save more and work harder. And for renters who still believe they are close to buying, that often happens.
But for those who feel ownership is too far away, the incentives change. If steady saving will not close the gap, long-shot strategies can start to feel rational. When the goal feels unattainable, the discipline built around that goal weakens.
In my latest interview, I sit down with Preet Banerjee, behavioural finance researcher and personal finance expert, to unpack what this research means. We discuss how housing pressures may be shaping financial behaviour, whether this response is cultural, and what the appropriate public policy response should be.
If housing affordability is influencing how people work, save, and invest, the implications extend far beyond real estate.
You can watch the full conversation here - What Happens When Young People Give Up on Homeownership?
John Pasalis is President of Realosophy Realty. A specialist in real estate data analysis, John’s research focuses on unlocking micro trends in the Greater Toronto Area real estate market. His research has been utilized by the Bank of Canada, the Canadian Mortgage and Housing Corporation (CMHC) and the International Monetary Fund (IMF).
Have questions about your own moves in the Toronto area as a buyer, seller, investor or renter? Book a no-obligation consult with John and his team at a Realosophy here: https://www.movesmartly.com/meetjohn