Net worth

Average Canadian net worth nears $1 million as growth grows 3x faster than normal

Canadian households are seeing their net worth skyrocket, at least on paper. Data from Statistics Canada (Stat Can) shows that household net worth jumped in the third quarter of 2021, mainly due to real estate. An average household is seeing its wealth accumulate at one of the fastest rates in history, with millennials leading the surge. There’s just one catch: Millennials are seeing a surge due to real estate. Those who don’t are lagging behind.

Canadian households saw their net worth grow 3 times faster than normal

Canadian households have seen their net worth skyrocket in recent years. Households saw their average net worth reach $981,900 in the third quarter of 2021, up 16.9% ($142,300) from a year earlier. About 58.5% of the increase in net worth was due to real estate, with assets accounting for 40% of total net worth. To say it’s fast growing is an understatement. High single-digit growth is considered significant, with double-digit growth before 2020 being rare.

Average net worth of Canadian households by demographic group

The average net worth of Canadian households by birth year demographic group, expressed in dollars.

Source: Statistics Canada; Live better.

Annual growth has slowed but remains at multiples higher than before 2020. It peaked at 20.7% in the first quarter of 2021 and has since fallen by almost 4 points. However, growth is more than 3 times higher than the pre-2020 average, driven by real estate. For those who still have it.

Millennials’ net worth is growing, but 80% is due to real estate

Millennials have the least wealth, and most of it is real estate. The average millennial household net worth reached $491,200 in the third quarter of 2021, up 38.7% ($137,000) from the previous month. Real estate gains were equivalent to 75.6% of the increase in net worth. Real estate represents a share equal to 82% of their assets. This is a significant concentration, most likely due to high prices. An early career demographic cannot easily diversify with this level of price growth.

Change in average Canadian household net worth by demographic group

The average change in net worth of Canadian households by birth year demographic group, for total net worth and real estate. Expressed in Canadian dollars.

Source: Statistics Canada; Live better.

Gen X is the wealthiest cohort in real estate

Gen X households experienced the largest increase in their dollar net worth. The net worth of the average household reached $1.26 million in the third quarter of 2021, up 29.7% ($288,900) from a year earlier. Real estate gains accounted for 54.4% of the annual increase in net worth. The value of real estate owned has reached approximately 57% of net worth. It’s also worth noting that Gen X had the most real estate wealth of any Stat Can generation cohort.

Baby boomers have less real estate wealth than Gen Xers, but there may be a catch

Baby boomers are the wealthiest cohort, having had the most years to accumulate it. The average Boomer household had a net worth of $1,336,088 in Q3 2021, up 10.5% ($126,888) from a year earlier. The real estate gain was equivalent to 39.5% of the increase in net worth and about 40% of total wealth. The real estate value of this demographic is lower, which raises an interesting contradictory data point.

Baby boomers are also the largest demographic of new mortgage accounts. They also happen to have the highest home ownership rate in the country. This may reveal a problem with how house prices are valued when included as assets.

Not many surprises in the net worth data, but it’s still a stunning data drop. Growth is slowing but remains above 3 times the annual rate observed before the pandemic. More wealth is generally a good thing, but it’s more complicated when it’s focused on real estate.

For example, millennials have seen their net worth concentrated in real estate. Homeless people, more and more numerous at these prices, are falling behind. This is probably another very important demographic liability that is forming.