Bridging the Generational Divide: The Psychology Fueling the Housing Crisis

I’m not sure where you’re hailing from, but here in Canada, few things are more closely looked at, written about, and talked about than the Bank of Canada’s rate announcements. A few days before the official release and continuing for about a week afterward, newspapers and magazines were filled with articles analyzing what our central bank would do, its impact on citizens, and, most importantly, how this all might influence housing prices.

Canada has a unique combination of factors that have created an unhealthy nationwide obsession with housing that remains unparalleled compared to its G7 counterparts. Everyone here has their own opinion surrounding housing, but two things remain certain: first, Canada has gained a large number of newcomers in a short period, and second, the number of houses being built is at a multi-decade low.¹ The contrast couldn't be starker. Throw into the mix the fact that Canadians can only lock in their mortgages for five years (as opposed to our friends down in the U.S., who can set and forget it for up to 30 years). The next thing you know, the BoC press releases rival the excitement that Canadians live through when their team makes the Stanley Cup Final. (And that’s saying something!) 

This fixation on the Bank of Canada's decision is more than just a hot topic—it reflects deeper systemic issues at the heart of Canada's housing crisis. There are twin dimensions contributing to this crisis. First are the complex, structural factors such as supply constraints and policy decisions. Second, and our primary focus for today, are the psychological forces that shape how we perceive and value our homes—forces that manifest differently across generations, further deepening the divide in housing attitudes and access.