Young Canadians Are Seeing Their Wealth Fall While Everyone Else Is Seeing A Boom

Canadian households continue to see their wealth soar — as long as they aren’t young. Statistics Canada (Stat Can) released data on household wealth for Q4 2021, this week. In general, households continue to see their net worth soar, with real estate playing a big part. Canadian households under 35 years old were a notable exception, noted the agency. Young households are the only cohort to see a drop in wealth — the first drop for any cohort since the outbreak. 

Canadians Under 35 Saw Their Net Worth Drop

Canadian households have seen their wealth soar over the past few years. The average household’s net worth hit $989,500 in Q4 2021, rising 0.8% from the last quarter. This is a substantial gain, but not all age groups are benefiting.

Households led by those under 35 years old saw their average net-worth fall to $326,300, down 1.4% from the last quarter. Stat Can said it was the only age cohort to see a net worth decline in the quarter. It also happens to be the only drop since 2020.

Canadian Average Household Net Worth

The average net worth for Canadian households per quarter, in Canadian dollars.

Source: Stat Can; Better Dwelling.

Young Canadians Are Being Left Behind

One trend that stands out is the wide gap between younger and older households. The average net-worth for 35 to 44-year-old led households was $657,200 in Q4 2021. This is nearly double the wealth households under 35 held. It’s easy to dismiss this due to comparing early career earners to prime earning years. 

It’s more difficult to dismiss the near doubling of wealth to the next age cohort. Households aged 45 to 54 had an average net worth of $1,293,400  in Q4 2021. That’s nearly double the previous age bracket, but the doubling doesn’t always happen. The 55 to 64 cohort only sees their average wealth increase 15.1% from the previous cohort, at $1,489,000. Doubling is no longer normal, with the oldest age group pulling back. 

Canadian Real Estate Hits A Record Percent of Wealth For Households

This might have to do with real estate values and the record share of net worth it represents in Canada. Real estate as a percent of net worth hit 52.4% in Q4 2021, up 0.4 points from the previous quarter. Before the outbreak, this share was 48.5% back in Q4 of 2019. Home prices in Canada outperformed the other components of net worth by at least 4 points on average.

Canadian Real Estate As A Share of Net Worth

The share of net worth represented by real estate for an average household.

Source: Stat Can; Better Dwelling.

The catch here is that you have to have real estate to benefit from it, which isn’t easy for the under 40 crowd. A higher share of income dedicated to shelter leaves young adults with less cash flow than previous generations. This can lead to concentration of wealth if they can afford a home. With sky-high home prices, many young adults were also left out of the rally.