The Death of the Starter Home and What It’s Done to a Generation

Why housing policy is still built for a market that no longer exists.

Meredith Martin, Mike Moffatt, and Sabrina Maddeaux

Feb 04, 2026

In this episode of Missing Middle, Sabrina Maddeaux and Mike Moffatt unpack how the housing ladder that worked for decades has quietly collapsed and why that failure is reshaping family life, careers, ambition, and Canada’s economic future. Mike reflects on buying a brand-new detached home in 2004 for $168,000, while Sabrina explains why today’s buyers, especially those now in their 30s, have effectively aged out of the starter home altogether.

They dig into why condos no longer function as a first rung on the ladder, how falling condo values and rising single-family prices are trapping buyers in place, and why policymakers are still designing solutions for a housing market that no longer exists. The conversation goes far beyond affordability, exploring the second- and third-order effects of a broken housing system, including delayed family formation, declining birth rates, reduced geographic mobility, stalled careers, lower productivity, and a growing sense that hard work no longer leads to stability.

If you’ve ever wondered why homeownership feels permanently out of reach or why that matters for the entire country, this episode connects the dots between housing, demographics, entrepreneurship, and the future of Canada’s middle class.

This isn’t just about homes. It’s about what happens when the social contract breaks.

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Below is an AI-generated transcript of the Missing Middle podcast, which has been lightly edited.

Sabrina Maddeaux: Mike, let’s start with what’s changed here. When you bought your first home, what did that process look like, and how does that compare to what first-time home buyers are facing today?

Mike Moffatt: So picture it. London, Ontario, Summer of 2004. The greatest movie of all time. Dodgeball: A True Underdog Story was dominating in the theaters and I was looking for my first home. In 2003, I moved back to my hometown of London, Ontario, to continue on with my PhD and my girlfriend at the time was working in Toronto and decided in 2004 that she would start doing a PhD at Western as well.

We decided to make the plunge, my girlfriend and I, and we were going to buy a home. We wanted something with a patio. We wanted something ground-level. We both love barbecue, but we were thinking of a two-bedroom townhome. For those Londoners out there, we were looking at something built in the 70s out in White Oaks or some area like that.

This is going to kill our Millennial and Gen Z folks. Housing was so cheap at the time that we decided we could actually get more with the down payment we had. So we ended up buying a brand new spec home. It was single, detached, but 1200 square feet, three bedrooms, one and a half baths, unfinished basement, small backyard, front yard, for about $168,000. And we could afford that. We knew we probably wouldn’t be there forever. But we also know that it’s three bedrooms, so we could easily raise a couple of kids in here. So we bought the three-bedroom, and we had his and hers home offices.

It’s not like that anymore unless you come from significant parental wealth.

I think what you’re seeing is that people are buying their first home later than we did. (I was 27 at the time.) And what they’re getting is often a shoe box condo or something like that. When they certainly weren’t ending with a three-bedroom, single-detached home. (There are still parts of the country where that’s possible.)

So it’s a big change. And I think that’s really important because when I hear this concept of “starter home,” I think it means different things to different generations. So in my generation, it meant maybe that two-bedroom townhome. My parents bought their first home, a two-bedroom, tiny bathroom, duplex, in the late 60s.

That’s our conception of what a starter home is. But when you think of a starter home, what are you picturing in your mind?

Sabrina Maddeaux: Your starter home experience sounds downright luxurious compared to this day and age. For me, a starter home is something that you would ideally buy in your mid to late 20s, maybe early 30s. It’s not where you want to end up for the next few decades of your life until you retire. It’s not necessarily where you plan to raise a family, but it’s enough to get you into the market, right?

And it might not be the exact location you want. And it’s probably quite small. And for my generation, it would typically be an apartment or a condo. Certainly, if you are in an urban area or a very small home outside the city. But the idea being that you would get into the market, you would build some equity, and then in that 5 to 7, maybe ten years mark, you would be able to then transition into what people call their “forever homes” where they do plan to stay much longer term and raise kids.

Mike Moffatt: Going back to my experience, that’s what we were thinking of as well, that we bought this home in 2004. But seven years later, we went into another three-bedroom home, which was larger and, more importantly, had a larger backyard.

I wouldn’t be able to afford the home that I live in right now if those first two homes in London, Ontario, hadn’t appreciated so much. So it’s that building of equity that is so important and allowed so many people in my generation to start out small and go big. And we talked about the fact that you are currently renting, you’re not living in 2004, you’re not having the experience that Hannah and I did. But you’re someone who would like to own a home someday. So what does that path currently look like for you? And do you still see a starter home as your first step in the market? When and if you’re ready to make the leap?

Sabrina Maddeaux: It’s not looking too good in general, but the starter home is another conversation I’d like to have because I think there’s still this concept that everyone who’s locked out of affordable homeownership at this point is looking for that starter home, and then will naturally hop on that property ladder that existed for decades. Whereas someone in my position who’s now in their mid to late 30s is, in my opinion, aged out of that starter home phase.

When I was in my 20s, wages were too stagnant, property prices were too high, even for condos, which were soaring way past any reasonable price-to-income ratio, even for a small one-bedroom or a one-bedroom plus den. So you couldn’t get in there and now you’re at a point in your life where you do want to find somewhere with longer term stability, but also somewhere more importantly, where you can raise a family, live with a partner with a good quality of life, have kids, have room for them, and what’s available as a starter home these days just doesn’t cut that.

So at this point in my life, I wouldn’t be looking to buy into a small one-bedroom condo, hold it for ten years until I’m almost 50. And then maybe if I don’t get stuck in there, depending on how prices appreciate and interest rates, and all of that, or that more long-term home, because at that point it’s just too late.

And I don’t think I’m the only one who’s in this weird phase where we’re past the point where a starter home makes any sense, financially or in terms of lifestyle. But there’s no other way to get in. So I guess the only option is forever-renting. But then also don’t have rentals that address those issues either. So you’re stuck in this void of hopelessness.

But the issue isn’t just Millennials, like me, who have missed that ideal age and lifestyle window to buy a starter home. Even people who did manage to buy what they thought was a starter home are often stuck there now. And that makes the entire idea of buying a starter home in your late 20s or very early 30s way scarier because you don’t have 10 or 15 years to wait for the market to turn around and build some equity.

That’d be one of my fears as well. Even if you did buy in now, are you ever going to even be able to trade up? Or are you stuck owning the same small condo that you didn’t want to rent? So what’s happening with condo prices versus detached homes that’s trapping people in place? Do you have a perspective on why that ladder’s broken?

Mike Moffatt: And to be clear, since the peak, we have seen that the price of single-family homes and condos decline, but before that peak and after that peak, we have seen some divergence. And, it really is dependent on the market.

Let’s focus on the GTA. We’re already seeing a bounce back in single-family prices. They’re looking to go up 5 to 7%, where we are expecting condos to decline, and a lot of that is just supply and demand.

You and I talked about that on the green belt episode. And we’ll link to that episode in the podcast, the sort of policy decisions that we’ve made over the last 20 years have allowed us to build a lot of high-rise.

And when we talk about condos and these small condos, it’s usually in the high-rise form. So, there are still lots of condo options, rental options, or purpose-built rental options in high-rise. There’s a lot to choose from, but we haven’t really built a whole lot of single-family. And to be clear, when I say that, I’m not just talking about single detached. I’m talking about multiplexes, townhomes, that kind of thing.

So they’re still in very, very short supply. And you’re absolutely right. That we see this cohort of condo owners who bought, let’s say, between about 2023, maybe about 18 months on either side of the peak. Their current condos are worth less than they bought them for. Now, that doesn’t necessarily mean that they’re all underwater in the sense that their outstanding mortgage is more than the house’s worth, because they have paid off some of that mortgage, particularly the people who bought it 5 or 6 years ago.

But that is a problem if they want to go into something larger. Normally, what you would do is you would sell that property, pay off the mortgage, and that would get you a 20%, 30%, 40% down payment that you could use towards the next home. But nowadays, if you are either underwater or just barely above, you sell that condo, and that might get you 2% to 3% of a down payment on something larger.

So there is this big problem where, simply you have all of these folks in condos who can’t sell that condo and have enough down payment to go into something larger. And that creates what I call the second-time buyer problem. Where we hear a lot about the challenges of first-time buyers.

And those challenges are very real. But there are these issues around the second-time buyers who bought a condo close to the top market and now really can’t go into something else. So you’ve got a lot of folks who are in those shoebox condos who really need to be in something that’s 2 or 3 bedrooms, because either they have kids or they’re about to have kids.

They want to be closer to ground level and that kind of thing. And they can’t do it. And I think a lot about the psychology of this, how it’s got to make people feel trapped in their current home. And I wonder what that means on the individual level? What does it also mean on the societal level when you have so many people experiencing this rather negative phenomenon? Beyond simply living in smaller spaces, what do you think are the biggest second and third-order effects of being stuck in place?

Sabrina Maddeaux: What’s really important is this isn’t just something that impacts the individual. And I think you’ll always have people who say, entitled Millennials or Gen Z, why don’t they just be happy with their condo? And not everyone needs a big house and a backyard, but this really does have second and third-order effects that impact families, communities, and Canada as a whole, both socially and economically.

And I think that’s a strong argument to put forward to policymakers and politicians to inspire them to fix this quicker.

When the housing ladder breaks, it doesn’t just change where people sleep; it fundamentally re-engineers how society functions. When people are either priced out of entry-level homes or stuck in a home they’ve outgrown, there are all those ripple effects, and there are a lot.

But for time’s sake, the few that are top of mind are family formation delays. When you can’t move from that one-bedroom condo to a home, or you can’t upgrade your home for more bedrooms, you might not have kids, or you might only have one kid instead of the 2 or 3 you want. Now, Canada already has an alarmingly low birth rate in 2024/2025, and Canada’s fertility rate hit an all-time low of 1.25 children per woman.

Research from the University of Toronto in 2025 also suggests that rising housing costs since the 1990s are responsible for 11% fewer children and over 50% of the fertility rate decline seen in the last two decades.

So these things are linked, and I know they’re linked for me personally as well. And yes, that impact obviously would be parents who want families or parents who want larger families. But we need as a society to have children. And that’s a basic fact to replace population workers, to care for the elderly, as a social good.

So the fact that’s not happening and that’s tied to housing should be ringing major alarm bells. And then we have the question of geographic immobility and community stagnation. Like in your experience, people used to be able to move through neighbourhoods or different neighbourhoods as their lives evolved. And that natural turnover really kept communities dynamic with a mix of ages and lifestyle and career stages.

But now you’re often trapped wherever you manage to buy first or rent for a certain period. So neighbourhoods that might have once been designed as more starter communities become aging-in-place communities that don’t have any of that refresh, or any of that diversity, which also has impacts.

And ultimately, many people’s career path gets determined not by how well they’re doing or the opportunities they can seek out or what might be the best fit for the economy, but by their real estate timing, rather than their talent.

You can’t take that promotion in another city because you can’t sell and reenter the market elsewhere. Or if you get laid off, maybe you can’t take a job or upskill and switch industries to something that would be a great fit for you, because you can’t move. As we enter this period of labor disruption with many industries experiencing so much change so quickly, and of course, the issue with tariffs and especially young people facing very high unemployment rates, that’s a major problem because it’s going to be a barrier to getting people back into the workforce and then also back into the workforce in a way that really matches their potential and ups our productivity levels.

It’s tied a bit to the death of career ambition, and I’m actually starting to see this talk about more and more, which I’m glad because when that work, save by upgrade incentive breaks, and the starter home has vanished. The impact on younger people’s ambition is just profound.

We’ve broken that social contract where hard work equals stability. When a starter home costs 10 to 12 times the median salary, a 5% raise feels meaningless or getting that new job, and that leads to a massive drop in workplace engagement. Why would you put in the extra hours, go the extra mile, or even look for that new job rather than just stay somewhere that’s comfortable?

Because ultimately, what’s it going to get you? Not much. So younger workers are increasingly choosing doom spending or quiet quitting because they realize that climbing the corporate ladder or even, I’d say, starting a new business. We look at our entrepreneurship rates, and no longer grant them access to the housing ladder. But I’m curious to hear your thoughts on this as well.

Mike Moffatt: They echo yours. And it’s a funny thing, here at the missing middle, we’ve got three of you who are all about 10, 11 years younger than I am. So we got you. We got Cara. We have Sean. And think about that, how different my life experience would have been if I had been born, let’s say, around 1990 instead of 1977.

And, in a few ways. First of all, I might not have ever moved back from Rochester, New York, where I was. So I may have just stayed there; I can’t afford to move back. Or I wouldn’t have bought that home in 2004. Would I continue living with Mom and Dad?

Probably not, but it would have been hard to buy anything. I certainly wouldn’t have the two kids that I have. I might not have any. I might have one. Well, there is no way we would have had two kids. Back in 2005, as you had mentioned, entrepreneurship. I started a company in 2005 with a friend of mine who became my business partner.

It still exists in London. It still employs people. So we’ve had dozens and dozens of employees over the years who started their career, made good money, been able to buy a house of their own and contribute to London, Ontario’s economy, because I wasn’t house poor in 2005, we had extra savings and say let’s put it into this company.

So I think about all of these milestones that I’ve had in my career, none of which would have happened if home prices were for my generation. What they were for yours. I would have probably been in London most of my life or lived in the US. Been a renter, and I would have never left London. Or if I did leave London, I probably would have moved somewhere with lower-priced homes, like Woodstock and driven to a job at Western every day.

And I think that’s another thing that people miss. The fact that this lack of affordability, this lack of housing in our cities, is the biggest contributor to sprawl. That’s causing all kinds of negative environmental effects. And it’s something that we need to do something about.

Sabrina Maddeaux: I think a lot of our younger listeners are going to find that answer very therapeutic, because one of the biggest frustrations is that older Canadians who have bought into homes at the time you did or before, think their lives would have been the same anyway. Because they worked hard, they did everything right. But young people are working hard and doing everything right as well, and it’s not tied anymore to that.

So to be able to have someone like yourself reflect and say, wow, not just my career, my family life, everything would have been so different had I been born just a little bit later. Not even that much later, ten years later, I think it is really meaningful and important to acknowledge.

Mike Moffatt: Well, thank you for that. I think part of it is just the fact that I’m pretty good at math, and I figured out that if you guys are not spending $3 on that cup of coffee. That doesn’t turn into the 300,000 you need for a down payment. So, I spent 20 years dealing with 23-year-olds and seeing them over time. So I’ve seen those different challenges. And then, frankly, a lot of it’s just math where you look at it and go. I could tell you guys to save more, but get out the Excel spreadsheet, the math doesn’t math.

Sabrina Maddeaux: Now, here’s what frustrates me about the political conversation around housing affordability. I find most politicians are still talking about the problem as just helping 23-year-olds get into that first rung of the ladder or that starter condo. But we’ve just established that the first rung is basically dead and gone and has been for a bit. We’re 10 to 15 years behind when we have that discussion.

So how does the death of the starter home fundamentally change the policies we actually need? And are we getting it completely wrong by still designing solutions around a housing ladder that doesn’t exist anymore?

Mike Moffatt: I think across the political spectrum, politicians and policy wonks are getting this wrong. I think more on the left, center left. They’re not even talking that much about homebuyers. It’s all rental, deeply affordable and so on. So on the more progressive side of the aisle, and I consider myself one, we tend to over-focus on those most in need, which kind of makes sense.

Those are the people hurting the most. So that’s where we’ll focus our attention. But there is a need for these middle-class policies. And I get frustrated by hearing politicians on the left or not hearing them talk about the importance of homeownership, or at least the importance of homeownership as an option.

That families should be able to rent or buy or do whatever’s best for them. But even on the right, I do think that the right tends to do this better. Still, I think there’s that over focus on first-time homebuyers. I do think there is this big policy gap when it comes to second-time buyers, that there is that gap, and there are things that we can do about it.

The obvious one is that First time homebuyers’ HST credit. Make that available to second home buyers, make that available to seniors who want to downsize, to free up that family home and sell it to the next generation. And I also think there’s a lack of difficult conversations around how we build more family-sized homes. We treat a home as a home, as a home, and that leads us to building a bunch of one-bedroom condos.

So that’s my analysis of the political spectrum of this. I feel like I have a better insight into the left than the right. You’re probably the opposite. Would love to hear your take.

Sabrina Maddeaux: Two major things. The unit is a unit problem is across the political aisle, and that’s when we’re just tracking pure numbers. And of course, on this podcast, we talk about density and development and that missing middle and that can look like so many different things. But ultimately, we do need more family-sized homes.

I’m not against policies that help first-time homebuyers, but I think it’s recognizing that that first-time homebuyer isn’t what a first-time homebuyer looked like 10 years ago, let alone 20 years ago. Again, someone like me who is looking for something where you can raise a family, it’s not going to be that one-bedroom condo. So we need different solutions in that regard as well.

And part of the issue is I think politicians tend to be very stuck, 5 to 10 years in the past on this issue, even thinking about who it impacts. I do still think the picture is of a 22-year-old or a 25-year-old, and that’s the demographic for housing affordability. When, for example, I started writing about the housing crisis seven or eight years ago - that’s how much time has passed.

When I started writing about it, maybe I would have been in the market for that first condo in that traditionally entry-level home. But all that time has passed, and I’m in a very different phase of my life. So, acknowledging that we’ve allowed this to fester for so long, the issue has actually grown and is now impacting different cohorts of people.

So yes, and we shouldn’t ignore 20-somethings, but the problem has now spanned to new demographics.

Mike Moffatt: I couldn’t agree more on that. And there are policy decisions that show that you have these first-time homebuyer savings vehicles, and they have yearly and lifetime caps on them that are clearly designed to be buying homes in that $500,000 to $600,000 range. In some parts of the country, you can get the type of home that I bought in 2004 for that type of money, but it simply doesn’t work, or it isn’t enough for a 30-something who has been a renter, wants to have kids and is looking for a family-sized home somewhere in the GTA. You’re not getting that for under a million. It just doesn’t exist. So I agree that there are these policies, and they are trapped in the past somewhat. I do think the fact that a lot of these policies are federal in nature, and housing markets are different in different parts of the country. I do make some allowances for that.

But at the end of the day, we need stuff that works in the GTA and works in Vancouver. Not just for buying a condo, or buying a new home in Weyburn, Saskatchewan - those are both fine things - but there are the cohort of people who really want to have a family home and should be able to stay in the GTA, because that’s where their family is, that’s where their jobs are and we need to be able to attract and retain that talent.

Sabrina Maddeaux: The first time home savings account that you brought up is a great example of that. I remember I was in the federal budget lockup a few years back when they first proposed this and their great projection. Over the course of, I can’t remember if it’s 4 to 5 years, but they were like, A young person can save $45,000 for a down payment. Let me tell you, as someone in their late 30s who lives in Toronto, or even would look somewhere within a few hours of Toronto, that’s comically low. You’re looking at 6 figures, if not over $200,000, for a down payment.

We will keep this conversation going. Obviously, we could talk about it for a lot longer.

Thank you so much to everyone for watching and listening. And to our producer, Meredith Martin, and our editor, Sean Foreman.

Mike Moffatt: And if you have any thoughts or questions about dodgeball, either the sport or the movie, please send us an email to Missing Middle podcast at gmail.com.

Sabrina Maddeaux: We’ll see you next time.