My parents’ generation had a formula. Buy a house. Pay off the mortgage. Watch the value climb for 25 years. Sell it or downsize when you retire, and use the equity to fund the next chapter. It worked for decades. In many parts of Canada, a house purchased in the 1980s or 1990s appreciated five, eight, even ten times over. That kind of return, on a leveraged asset you were living in anyway, made real estate feel like the only retirement plan you needed.

The problem is that the conditions that made it work are unlikely to repeat. And the generation entering the market now, if they can enter it at all, is staring at a completely different set of numbers.

This isn’t financial advice, and I’m not predicting where housing prices will go. But the assumption that your house will fund your retirement deserves a closer look.

How it used to work

For decades, the Canadian housing market delivered returns that most investors would envy. A house bought in Toronto or Vancouver in the early 1990s for $250,000 might be worth $1.5 million today. That’s roughly a 6x return before you factor in mortgage interest, property taxes, maintenance, insurance, and renovations. After those costs, the real return is lower, but still substantial.

The math was especially compelling because of leverage. If you put 10% down on a $300,000 house, you controlled $300,000 worth of real estate with $30,000 of your own money. When the house doubled to $600,000, your $30,000 turned into $330,000 in equity. That kind of leverage is hard to replicate safely in the stock market.

Combine that with the fact that capital gains on your primary residence are completely tax-free in Canada, and you can see why an entire generation believed they didn’t need to invest in anything else. The house was the plan.

Why the next generation can’t count on this

The playbook breaks down in several ways at once.

Entry prices are dramatically higher. A first-time buyer in 2026 is paying prices that already reflect decades of appreciation. The house that cost $250,000 in 1995 now costs $1.2 million. Even if it appreciates another 50% over the next 20 years, that’s a very different return profile than the previous generation enjoyed. You’re buying high and hoping it goes higher.

Carrying costs are heavier. With higher purchase prices come bigger mortgages, which means more interest paid over the life of the loan. Property taxes, insurance, and maintenance all scale with home value. A $1.2 million house doesn’t cost the same to maintain as a $250,000 house. These carrying costs eat into the “return” you see when you eventually sell. Most people never add them up.

Interest rates are no longer guaranteed to fall. Much of the housing boom from 1990 to 2020 was fuelled by steadily declining interest rates. Lower rates meant buyers could afford bigger mortgages, which pushed prices up. That tailwind may not persist. If rates stay elevated or even normalize at a higher level than the 2010s, one of the biggest drivers of appreciation is gone.

Downsizing isn’t always the windfall it seems. The retirement plan was: sell the big house, buy something smaller, pocket the difference. But in markets where everything has gone up, the smaller house also costs a lot. If your $1.5 million home became a $600,000 condo, you’ve freed up $900,000 minus transaction costs (real estate commissions, land transfer tax, legal fees, moving). In practice, many downsizers find the gap is smaller than expected.

The costs most people don’t add up

When people say “my house went up $500,000,” they rarely subtract what they put in along the way. Here’s a rough picture of what a homeowner might spend over 25 years on a home purchased for $800,000:

Cost	Rough 25-year total
Mortgage interest	$400,000–$600,000
Property taxes	$100,000–$150,000
Maintenance and repairs	$100,000–$200,000
Insurance	$40,000–$60,000
Renovations	$50,000–$150,000

That’s potentially $700,000 to $1,100,000 in carrying costs alone. If the house appreciated from $800,000 to $1,400,000, the headline gain is $600,000, but the true return is much thinner once you factor in what you spent to hold it. And that doesn’t include the opportunity cost of what that money could have done invested elsewhere.

The opportunity cost

This is the part that’s hardest to see in real time. Every dollar that goes toward your mortgage, your property taxes, and your roof repair is a dollar that isn’t invested in the market.

Over the last 30 years, a balanced portfolio of global equities has returned roughly 8-10% annually. That includes every crash, every recession, every “this time is different.” Meanwhile, Canadian housing, after you strip out all the carrying costs and adjust for inflation, has returned closer to 3-4% in real terms in most markets. Some markets did better. Some did worse.

The point isn’t that housing is a bad investment. It’s that treating it as your only investment means you’re potentially leaving a lot of long-term growth on the table. A house gives you a place to live, forced savings through mortgage payments, and tax-free gains. Those are real benefits. But it also locks up your capital in a single, illiquid, geographically concentrated asset. That’s the opposite of diversification.

The affordability wall

There’s an even simpler version of this problem: a growing number of Canadians can’t buy at all. In Toronto and Vancouver, the average home price is multiple times the average household income. Even with a dual income, saving for a 20% down payment can take a decade or more.

For people in this situation, “your house is your retirement plan” isn’t just questionable advice. It’s irrelevant. And that’s actually important to acknowledge, because it means this generation needs to be even more intentional about investing in other ways.

If homeownership isn’t on the table right now, or if it is but it’s consuming most of your cash flow, making sure the rest of your money is working for you becomes critical. Registered accounts give you tax-sheltered growth. Low-cost, diversified ETFs give you exposure to the global economy. Time in the market does the rest. None of this requires owning property.

What a different plan looks like

None of this means you shouldn’t buy a home. Owning a home has real financial and personal benefits. The point is that it shouldn’t be the whole plan. A more resilient approach splits your wealth-building across multiple pillars:

Your home, if you own one, gives you stability and tax-free appreciation. Your TFSA and RRSP give you tax-sheltered investment growth. A non-registered portfolio gives you flexibility and liquidity. Together, these reduce the risk that any single market, housing or otherwise, dictates your retirement.

The generation that built their retirement on housing wasn’t wrong. They were also in the right place at the right time. They bought into a market that happened to deliver historic, once-in-a-generation returns during a period of falling interest rates, growing populations, and expanding credit. Betting on that exact sequence repeating is a gamble, not a strategy.

What I think about

I watched my parents’ home value climb steadily for my entire childhood. It shaped how I thought about money. For a long time, I assumed buying a home was the single most important financial move I’d ever make. And in some ways it is. But I’ve come to see it differently now.

My house is where I live. It’s not my portfolio. The equity in it is real, but it’s not liquid, it’s not diversified, and I can’t spend it without selling or borrowing against it. The investments I hold separately, in accounts I can actually see and manage, are what I’m building my financial future on. The house is a bonus, not the foundation.

If you’re renting and investing the difference, you’re not “throwing money away.” You’re making a different capital allocation decision. If you’re a homeowner putting every spare dollar into your mortgage and nothing into your investment accounts, that’s worth thinking about too.

Your house is not a retirement plan