The millennial and Gen Z dream of home ownership is being exploited in ways that just make houses more expensive

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Financialization of housing is a direct reason for affordable home prices for first time buyers.Evan Buhler / The Canadian Press

There’s something comforting about the idea of ​​upstart fintech companies addressing the inefficiency of homes for young adults.


Somebody has to do something, right? Politicians have been ineffective on housing affordability, and the traditional real estate industry just wants to write off mortgages and sell homes. If ever there was an area begging for some disruptive thinking, it’s housing.

Some of our keen entrepreneurial minds are taking this opportunity to offer partial investment in homes and do-it-yourself plans. As a business model for squeezing more money out of the Canadian home-ownership obsession, these new ventures are remarkable. The issue of housing accessibility for the youth is more of a problem for them than a solution.

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In a time of increasing volatility, we are at least building a pan-Canadian consensus. Owning a home is the main source of wealth in life and, if you can’t really own a home, real estate is where your money should be as an investor.

Bank of Canada warns of increased home debt as interest rates rise

This financialization of housing is a direct reason for the affordable home prices for first time buyers. Bank of Canada Deputy Governor Paul Baudry said this in a speech earlier this week about the stability of the financial system. This was the central bank’s first direct mention of investors as the cause of rising prices.

Converting homes into investments is a natural consequence of what is happening in the real estate market. The national average resale home value of $716,585 in October is up 18.2 percent over the previous 12 months and 36.5 percent higher than the previous 24 months.

Excellent overall investment conditions are also part of the story. All types of financial assets have increased in value over the past year or more – stocks, commodities, crypto and more. For almost everything, participation in this fast-growing market has been unusually broad-based, thanks to digital investment platforms that have attracted large numbers of young investors.

Hot housing coupled with the new investment climate has given us a growing number of startups aimed at bringing property ownership to young adults. As mentioned in a recent column, you can invest as little as $2,500 with BuyProperly for a partial portion of a home occupied by tenants. When the property is sold, investors receive a share of any profits.

Rent-to-own ventures are also emerging. Key, whose advisory board includes former Bank of Canada governor Stephen Poloz, offers anyone the opportunity to buy at least 2.5 percent of the property with other investors and then live in it. The monthly cost to live in the property covers the rent and a small amount that goes towards building equity.

Carpe Diem offers rental plans targeting young adults with parents who are willing to make a down payment to buy them a part of the home. Addy is an example of a platform to invest directly in commercial properties. A yet-to-be-launched venture called Willow is using the term “propsharing” to describe its process of offering ownership units in properties such as apartments, office buildings and shopping centers.

The history of investing is replete with such stories. Hot trends emerge, followed by a glut of investment vehicles to take advantage of them. If the past is any guide, investment vehicles like this often appear much closer to the end of a bull market than it is to the beginning. Loss of money in housing is also possible.

What makes the trend of investing in real-estate distinctive is that it works against young people who have an actual home or condo, which is free and clear. When investment companies buy homes to offer to investors, it means more players are competing for a limited pool of properties for sale and higher prices.

The saddest aspect of young adults investing in property like this is that it is completely second best. As much as anyone who owns a home can’t stop talking about their increasing equity, the real joy of home ownership is owning a real home. Get someone to talk about their home and you’ll hear about kids, pets, guests, favorite rooms, and great experiences.

Expensive housing is a big problem for Millennials and Gen Zs, generations who have made massive amounts of money in housing and want their fair share. But financial ventures that give young adults access to real estate are a symptom of expensive housing, not a solution.

Are you the young Canadian who has money on his mind? To set yourself up for success and stay away from costly mistakes, Listen to Our Award-Winning Stress Test Podcast,


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