While Canada has unique challenges, this issue extends beyond its borders. The pandemic shifted the importance of housing for people around the world. Suddenly, we all found ourselves spending more time at home, so the desire to make it a comfortable place to be in for days on end grew a lot stronger. Other countries like New Zealand and Australia face similar struggles to Canada, and even in the U.S., housing affordability has become a nationwide crisis, with one report stating that homes are unaffordable for the average American in 99% of the country.²

You might assume that housing prices are strictly a matter of structural factors like how many are being built, how many people there are, supply and demand, inflation, and so on. While it’s true that these are central components driving the narrative around housing, how much people are willing to pay for something—or the desirability of a particular object—is very much psychological. 

So how do people decide that they are better off spending their paycheck on the mortgage of their first home over that trip to Europe or a brand-new car? These decisions aren't purely rational; psychological factors like identity, societal expectations, and a sense of security deeply influence them. To truly understand the housing crisis, we need to examine not just the economic and structural forces at play but also the psychological underpinnings that drive people's choices and behaviors.

Perhaps it’s self-explanatory, but Maslow’s hierarchy of needs is a fitting lens to adopt when approaching housing. We need to have safety, shelter, and all the essentials at the bottom of the pyramid before we start dreaming big. That’s why when people start thinking about buying a home, they’re not only considering their commute, the square footage, and what furniture they can fit inside. First, homeowners must start by satisfying that basic need for stability, something that provides them a feeling of safety and ontological security—like their life inside is more predictable, no matter the chaos outside.

Even for those of us where renting makes more financial sense (especially in jurisdictions with strict rent control), there is still an impulse to have a place to call their own. Part of this impulse is driven by pragmatic reasons rooted in the lower levels of the pyramid, such as the assurance that a landlord cannot evict you whenever they please. However, yet another part of this desire taps into higher psychological needs related to identity and social belonging.

This other part has more to do with the fact that where you live says a lot about you—or at least, we tend to think it does. The kind of home you own, or even if you own one at all, contributes to how you view yourself as an individual. This is where social identity theory kicks in, where owning a house isn’t just a personal milestone; it’s a badge of belonging for many North Americans (and in other societies that are more individualistic). It’s a marker that you’ve finally “made it,” fitting you into a group of people who have achieved a certain status. This goes beyond shelter to being part of a club that’s getting smaller and more exclusive as prices rise (how ironic).

The psychological attachment and sense of identity that we can derive from housing can make people stretch their finances, even when it doesn’t make rational economic sense. At an individual level, this is clearly tough on the wallet—but on a societal scale, it’s a catastrophe that fuels the housing crisis. 

To understand how we got here, let’s look at the issue from two different generational perspectives. On the one hand, we have the traditional narratives of homeownership—the so-called “American Dream” as experienced by older generations—where a family is happy owning a modest home with a white picket fence. On the other hand, we have the ever-evolving ideals of success among younger generations. Changing family structures have impacted housing needs, with the average American family having fewer children and, thus, needing less space.³ What it means to be successful has also changed; rather than it being just about owning property and overall financial wealth, today’s narratives of success also revolve around personal fulfillment, flexibility, and life experiences. 

However, not everything is so holistic. The rise of social media platforms like TikTok and Instagram has had a powerful effect on how the younger generation perceives housing, with endless posts of designer homes with curated interiors that can make even a perfectly comfortable home feel inadequate.⁴ This constant comparison has also created a desire for more luxurious dwellings, feeding unrealistic expectations about what our own living spaces should look like.

Furthermore, until a few years ago, many of the shows about home ownership that we’d see on TV would be about maintaining or caring for your home (like “This Old House” on PBS). Meanwhile, in the last 10 years or so years, there has been an increasing rise in reality shows featuring luxury real estate agents who have glamorized homeownership to a point where it’s no longer just about having a place to live. The perfect renovation, the trendy upgrades, the lifestyle portrayed—all of it creates a false sense of what’s attainable for the average person. These shows often make buying and selling homes look like an effortless way to financial security and happiness, which is far from reality for most people. This portrayal has added more fuel to the housing obsession, making people think that their lives will somehow magically improve if they just had that open-concept kitchen or that luxury master bath. 

This cultural shift, fueled by social media, reality television, and changing societal values, amplifies the psychological and social forces—such as identity, status, and belonging—that are deeply entwined with the housing crisis.

There is considerable discussion these days about zoning laws and NIMBY (Not In My Backyard) attitudes and how they play a big role in limiting housing development. But what often gets overlooked is how much of this resistance is rooted in deeper generational factors. 

The reality is that these forces often stem from deeper age-related dynamics, with older homeowners being more likely to oppose zoning changes that would allow for higher-density housing. We’ve seen this on the ground in our collaboration with the Canadian Mortgage Housing Corporation (CMHC), the crown corporation that is mandated to improve housing supply in Canada. This resistance is, at its core, a subconscious one—as older individuals are often more set in their ways. Any sort of change, especially one that might alter their immediate environment, the neighborhood where they’ve probably lived for decades, can understandably feel quite threatening. For many, their community represents safety, stability, and familiarity. It’s quite understandable that anything that disrupts that sense of predictability could feel inherently negative and be met with resistance. 

From a psychological standpoint, older homeowners may also derive more of a sense of identity from the neighborhood they live in. This intertwining of identity and community aligns with social identity theory, where changes to one's environment can feel like a personal threat, reinforcing behaviors that unintentionally perpetuate housing inaccessibility for younger generations. The type of housing, the space, and the overall character of the area become intertwined with their self-concept. Introducing higher-density housing, such as multi-unit buildings or low-cost apartments, can be felt and seen as a threat not just to property values (which they probably care less about than younger folks!) but to the very fabric of the community that they identify with. This fear of change can lead to behaviors that are protective, even if they unintentionally block younger generations from accessing affordable housing options.

Ron Butler, one of my favorite commentators on the housing situation here in Canada, pointed out recently that city councils often comprise older individuals. Since they’re the ones most involved in their community and have usually been around the neighborhood the longest, they’re also the same individuals who don’t want to see their neighborhoods change. This is why they’ll tend to agree to policies that seem pro-housing at a glance but then vote to increase fees or regulations to ensure new developments don't actually go forward. This behavior reflects a broader societal trend where those who are already secure in their housing positions wield influence over policies, often at the expense of those trying to enter the market. 

This reluctance to embrace change, driven by a mix of identity, stability, and fear of the unknown, highlights the deep psychological roots of the housing crisis. It underscores how individual and collective behaviors, shaped by generational and social factors, can influence broader policy outcomes. To address this divide, we need solutions that not only tackle structural barriers but also consider the human elements—our values, fears, and sense of belonging—that underpin these challenges.

So far, we've seen that housing perception, supply, and affordability are influenced not only by structural factors but also by deeply psychological dimensions that play out differently across generations. To make housing solutions effective, we must consider how to align these solutions with people's values, identities, and motivations. Let’s explore some potential solutions that are not only structural but also resonate with the underlying psychological needs that drive human behavior.

1. Redesigning financial products to align with generational values and needs

Financial products must evolve to align with the changing values of younger generations, who are often the ones priced out of the housing market. Millennials and Gen Z are more interested in flexibility, experiences, and community than in tying themselves down with a massive mortgage.⁵ Could we imagine a mortgage product that offers flexibility—such as the ability to rent out part of the property easily, or a co-ownership model that reduces risk and cost for first-time buyers? This type of arrangement would invite a collaborative approach, where older generations, who already possess more financial security, might work with younger buyers through shared ownership or rental arrangements. These products could be designed with features like adjustable payments based on income fluctuations or an option to enter into a co-ownership agreement with friends or family, providing a more realistic path to homeownership without sacrificing the values that are important to newer generations while also making it more affordable to enter the market.

Older generations already have financial products at their disposal that allow them a certain degree of flexibility. Since many of them have already paid off their home or have built significant equity, they’re able to withdraw funds under lines of credit or even "sell" a piece of their property while still living there. 

Having spent some time in banking, I’ll be the first to acknowledge the limitations here—real estate moves very slowly, especially on the regulatory front, since financial products tied to real properties are often part of longer-term instruments sold on financial markets. These types of hurdles mean that even the best-designed financial products with significant potential consumer interest may take years to gain traction. In Canada, where the banking sector is heavily regulated, such an instrument might not even be possible without government intervention. 

While it’s true that the large majority of aspiring homeowners are not able to afford a home, for others, there is a certain reluctance to engage with traditional mortgages, which is influenced by their preference for flexibility and the perceived risks of long-term commitments. These types of novel products would address such concerns by offering more adaptability and reducing perceived risks. 

2. Promoting intergenerational housing to address multiple problems 

Intergenerational housing initiatives have the potential to solve multiple problems at once—providing affordable housing while also fostering social cohesion. As the name suggests, multigenerational homes (also referred to as “bigenerational” or “intergenerational”) are dwellings that allow several generations of the same family to live together under one roof. Having grown up in Eastern Europe, I witnessed firsthand how this arrangement offered support systems that benefited the entire family: grandparents often took care of children, enabling parents to pursue their careers with greater ease. In many parts of the world, this setup is not seen as a compromise but as an optimal arrangement, offering emotional and logistical support within the family.

In North America, however, intergenerational living is often viewed as a temporary fallback during hard times rather than a long-term solution. This cultural perception stems, in part, from the focus on individuality and independence prevalent in Western societies. Yet, this mindset creates missed opportunities to embrace housing arrangements that provide stability, affordability, and support for entire families.

To shift perceptions and make intergenerational housing a more viable and appealing option, communities, organizations, and governments must focus on three key strategies. First, designing homes specifically for multigenerational living—such as those with separate entrances, kitchens, and private spaces—can make the arrangement more comfortable and desirable. Second, policies and incentives must encourage the development of such homes, from zoning adjustments to financial subsidies that make these projects feasible (Canada has recently implemented such incentives).⁶ 

Finally, reshaping public opinion through media, storytelling, and educational initiatives is a critical yet challenging endeavor. It requires not only a concerted effort to produce films, documentaries, and social media content that celebrate the benefits of intergenerational living but also a genuine, grassroots engagement that transforms longstanding cultural narratives. Rather than a top-down mandate, this change must emerge from diverse voices—community leaders, educators, filmmakers, and everyday citizens—who together can foster a new discourse that redefines what it means to live together across generations. Such multifaceted efforts, though difficult and gradual, are essential for challenging stereotypes and building widespread, lasting support for housing models that bridge the generational divide.

3. Developing empathy-building initiatives to promote understanding between generations

The last point brings us to the fact that in the current generational divide in housing, empathy-building initiatives are essential, as seen from the tension that is present in neighborhoods across North America that do not want to have their zoning laws changed to accommodate multi-family units. These initiatives could function on multiple levels—such as creating community programs where young people and older homeowners can come together to discuss housing challenges or establishing local councils that actively encourage intergenerational collaboration on housing solutions. The goal is to help each generation understand the needs, fears, and aspirations of the other.
Empathy-building goes beyond just talking; it’s about shared experiences and working together to find common ground. For example, community projects where young people help older residents with home maintenance could foster a greater sense of mutual respect and understanding. In exchange, older residents could share their knowledge and experience, creating a cycle of learning and empathy that benefits everyone. Although such programs do not exist yet, they could certainly fit within the mandate of organizations such as Elder Help Peel. Combining this with platforms for intergenerational dialogue on housing issues—with an emphasis on collaborative problem-solving—can create a richer, psychologically informed approach to tackling the housing crisis. These platforms could bring diverse groups together, using structured dialogue methods to reduce misconceptions and foster collective action.

The generational housing divide is more than an economic issue—it’s a societal one that’s deeply embedded in our identities, our values, and our needs for stability and security. Moreover, we’ve explored how other psychological factors—such as the ever-evolving concept of an "American Dream”—underscore how deeply these issues are connected to age and identity. To move forward, we need a nuanced, psychologically informed approach to housing policy—one that considers both the market forces at play and the human factors that are often ignored.

Further research is needed to understand the long-term psychological impacts of current housing trends. We must treat housing not just as a commodity but as a fundamental aspect of human well-being and societal stability, deserving of thoughtful, empathetic solutions. By addressing these challenges and bridging the physical gaps between generations, we not only improve housing outcomes, but we might also be able to help reduce social and interpersonal divisions that are plaguing our society. This approach underscores that housing is not merely a subject of discussion in the media and around the dining table whenever there is a central bank interest rate decision but is instead a critical foundation for personal security, community stability, and long-term prosperity.