The Third Kid is Becoming a Luxury Status Symbol
Why housing costs, childcare, and urban policy are making large families increasingly unaffordable in Canada.
Why are so few middle-class families having three children anymore?
Canada’s fertility rate has fallen to a record low, but the conversation often focuses on whether people want children rather than why so many stop at two. As housing, childcare, transportation, and the opportunity costs of parenting have all become more expensive, having a third child has increasingly become something associated with wealth rather than ordinary middle-class life.
In this episode of DemograFix, Mike Moffatt and Cara Stern examine the economics behind family size. They discuss how the shortage of family-sized housing, rising costs, and changing labour market realities have reshaped the decision to have children, and what governments would need to do if they genuinely want to make larger families attainable again.
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Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.
Cara Stern: I’ve started noticing something at my kid’s school when I’m at pickup, or a birthday party, or just talking to other parents in the neighbourhood, I almost never meet a family with three kids. Occasionally it happens and I remember them because it’s notable enough. And the rare time when I do meet a family with three kids, my first thought is, “Oh, this is a wealthy family.” Either they got into the housing market early and built their wealth there, or they’ve got some serious family wealth, or maybe massive incomes.
Canada’s fertility rate hit a record low last year, entering ultra-low territory. Some of that is people not having any kids, but of the ones who do, two seems to be the maximum most middle-class families will have. I suspect many of these families are people who did the math and got to the same place most middle-class urban families are getting to right now, which is that a third kid would require things that we just can’t easily afford: space, time, and money.
Mike Moffatt: When things are unaffordable, they become a status symbol. Think of someone who drives a very high-end luxury car. They’re signaling to the world, or at least attempting to, that they have the resources to afford such a lifestyle. We’re seeing the same thing play out with families with three or more children. There’s a cohort of high-income, high-wealth families—think of one-percenters—that are having three, four, or five kids as a status symbol, let alone millionaires, billionaires, and trillionaires with 37 kids, some of whom have names that look like a cat stepped on the keyboard.
This is a real phenomenon, and we’ve seen in the data that billionaires have far more kids than the rest of us. If we look at the media about this trend of three kids as a luxury status symbol, there are a lot of articles out of the U.S. and the U.K.
For example, the Financial Times in the U.K. ran a piece on it last summer that went absolutely viral. This observation of three kids as a luxury status symbol goes back to at least 2008, when the Washington Post ran a piece on it. But for some reason, we haven’t seen a lot of this discussion play out in the media in Canada, though I do have friends who bring it up from time to time, so it has at least permeated the Canadian consciousness.
Cara Stern: Yeah, even if it’s not in the media yet, I think there are a lot of people who genuinely think that is actually happening in Canada just because of the cost of living. You need a lot of money to be able to raise three or more kids.
Mike Moffatt: Absolutely. I often hear this when we’re talking about younger friends of ours—gossips that we are—who are lawyers and doctors, where we will say, “Oh, well they must be doing well because they just had their fourth kid, and I can only imagine what that costs.”
If large families have become this status symbol because they’re so unaffordable, that raises the obvious question of what has made having three or more children so unaffordable.
I’m a housing guy, so housing is the obvious answer. If you have three or more kids, you’re going to want a home that has at least three bedrooms, and more likely four or five. Those are incredibly expensive, particularly in our cities—what I like to call places with NHL teams.
Unsurprisingly, there’s data from the Institute for Family Studies that shows that women in one- or two-bedroom homes have much lower fertility rates than women in three- or more bedroom homes. That shows if you have the space, you’re probably more likely to have kids.
Cara Stern: Based on National Occupancy Standards, a maximum of two people should share a bedroom, even if they’re the same sex. So even if you end up with three girls, for example, they couldn’t all share a room, otherwise you’d be considered under-housed. You need to have at least a three-bedroom home when accounting for the parents’ room. That is a guideline that determines what is considered appropriate housing in Canada, and I suspect many people agree with those standards. Most people, if you ask them what they would like to have for three kids, would say a minimum of two bedrooms, if not three.
Mike Moffatt: Knowing some families with three boys, I can’t imagine all three boys in the same room. Just the chaos and, quite frankly, the smell would not be fantastic. This three-bedroom thing is really important.
There is data and studies out of the US showing that when a woman had three or more bedrooms available to her, it didn’t actually make that much of a statistical difference what type of house it was. You could be talking about a high-rise, a townhome, or what have you—it was actually the number of bedrooms that made a bigger difference than the form of the house.
But of course, in Canada, we don’t really have three-bedroom apartments, particularly in high-rises. If you need something that’s family-sized, you’re probably looking at single-detached, semi-detached townhomes, or maybe some older low-rise apartments. You’re probably going to need that kind of ground-oriented housing.
Cara Stern: And three-bedroom family units are exactly what developers in Canada have stopped building. They’re just more expensive to build with current building codes, and politicians have been treating a studio and a three-bedroom as interchangeable units for the purpose of housing supply so they can say, “Yay! We are hitting our target. We’re getting this many units on the market.” But there’s a big difference between a studio apartment and a three-bedroom home; they’re not at all the same.
By the National Occupancy Standard, over 800,000 Canadian families are living in unsuitably small housing, and Toronto is near the top of the list of places where that’s happening.
Mike Moffatt: We have these politicians representing our cities, both urban and suburban areas, who have this “unit is a unit” mindset. What they fail to recognize is that a high-rise apartment unit, while incredibly useful, houses on average half as many people as a full-sized home and is not as flexible. You can fit six single people in a single-detached home, but you can’t fit a six-person family in a high-rise unit. The types of units we build are important, and our politicians tend not to make that distinction.
You’ve got the housing side of it, but you’ve also got the childcare side of it. When I talk about childcare, I want to use the term as broadly as possible: stay-at-home parents, daycares, full-time nannies, and so on. The full-time nannies piece is important. I think that is how a lot of these very high-income families are able to have three or four kids, as it allows both parents to continue working. It almost adds a third parent to the household and ensures the kids are looked after.
Cara Stern: For full-time care, the other option is to have one parent stay home, but that’s a practical impossibility for the middle class or even the upper-middle class if they want to have a decent-sized home in an urban area on a single income. It’s pretty much impossible to do that nowadays. There may have been a time when it was possible, but those days are over. That is, of course, because of housing prices; both people need to work full-time to afford these prices. This is a big change from the past, where houses could be purchased with one income or one-and-a-half incomes, meaning someone could work part-time, giving them time to take care of the household and the kids—especially since school finishes a lot earlier than most jobs do.
Mike Moffatt: Let’s review: if you’re a middle-class family in an urban or suburban area and you want to have three or four kids, a full-time nanny is out because you just can’t afford it. Being a stay-at-home parent is out because it’s no longer feasible due to the price of housing. That leaves daycare as the only plausible option.
Cara Stern: And while that’s helpful, it’s not a one-size-fits-all solution.
There’s a study that looked at how the introduction of low-cost childcare impacted family sizes in Quebec. I don’t know how much we can draw from this to compare it to the introduction of the $10-a-day program across the country because the economics are quite different, mostly due to housing. But here’s what they found: for women in their early 20s, mostly before they had kids, subsidized childcare raised the odds of having a first or second child without hurting employment. But for women in their early 30s, the effect was the opposite: the odds of having a second or third child went down.
The theory the researchers had was that affordable childcare made returning to work easier, and once you’re earning again, stepping away for another baby just costs so much money.
Mike Moffatt: Cara, I love it when you go full Econ 101. Even though you didn’t use the term, you were talking about opportunity costs there. There is a massive opportunity cost for women, including the impact on career progression, connections, missed promotions, and so on. Having more daycare and more attainable daycare is fantastic, but it’s not a panacea.
Cara Stern: No matter how you look at it, if you’re taking time off work, there is going to be an impact, even if your maternity leave policies are pretty good. A woman in her early 30s has been working for ten years and has built up seniority and a salary, so the actual financial cost of leaving that career for a third parental leave is much higher than it was the first time. Later on in your career, you’re leaving more money on the table and missing out on promotions. It’s very difficult to catch up when you’ve been taking so much time off. Cheaper daycare helps people get back to work faster, but once that woman’s back at work, another baby means starting that clock all over again with time off, losing out on earnings, and everything else that comes with it. It’s a big sacrifice that a lot of women realize the weight of, especially after doing it once or twice.
Mike Moffatt: There’s a bit of a caveat when we look at the Quebec experience of the 1990s because cheap childcare wasn’t the only policy they introduced. It doesn’t make for a perfect natural experiment because they simultaneously cancelled a cash baby bonus that had existed since the late ‘80s, and that bonus was specifically weighted toward larger families.
Before that cancellation, having a third or fourth child was worth about $8,000 paid out over five years. That program was cancelled when childcare was introduced, so it’s hard to know how much of the Quebec experience was due to the introduction of childcare versus the removal of that program. Researchers have noted that it’s hard to disentangle those two effects when looking at the overall effect of the Quebec reforms in the 1990s.
Cara Stern: But what I think is actually the more important point for today’s viewer in Toronto, Vancouver, or Ottawa is that those studies measured the effects of a policy introduced when housing cost a fraction of what it does now. My hunch—and I want to be clear that this is just me guessing, not a formal finding—is that a Quebec-style program does more for fertility today than it did in 1997 because the overall cost of living context is just so much more brutal. I always say I would not have had a second kid if childcare was still $2,000 a month or more because the math just wouldn’t work. I couldn’t figure out how to make it work in my budget.
Mike Moffatt: Absolutely, and that’s really important to note. This comes up a lot in policy work where I’ll get questions like, “If we raise or lower development charges, how much of that is passed along to the end consumer?” A lot of times, it depends on the underlying market conditions. The same thing applies here: the Quebec experience was in a very different real estate market. It’s fair to expect some differences when porting a policy from the 1990s under one economic circumstance over to the GTA in 2026, where the impact is likely to be different because of a different housing context.
Cara Stern: Childcare policy might help, particularly for getting to a first or second child at an earlier part of your life, which gives you more time biologically to have a third kid if you want. A lot of people don’t start having kids until their mid-30s, and then you have to move quickly if you want a third. There’s also just so much working against you between housing costs, opportunity costs, and career timing all stacking up at the same time.
Mike Moffatt: Yes, and I also think the expectations we place on parents play a big role here. This isn’t the 1970s or 1980s where latchkey kids were the norm. It wasn’t out of the ordinary for a kid in grade three to wear a house key on a shoelace around their neck, let themselves in after school, pour a bowl of cereal, and watch cartoons. Not only is that not normal anymore, but in many cases, it’s not even legal. You can’t expect kids to do that. The context of raising children has changed, plus there’s a growing expectation that kids be enrolled in hundreds of increasingly expensive activities. Having one child play hockey is outrageously expensive; having three or four seems downright impossible.
Cara Stern: It’s not just expensive, it’s also time-consuming. There is a big logistical challenge in trying to get multiple kids to all of their practices on time. If you want to have any sense of self as a parent, you probably want to have your own activities and hobbies, too. Trying to work all of that together is incredibly difficult when you have more people to coordinate with.
Interestingly, there’s data showing women spend more time engaging actively with their kids than they did in the past, which is pretty surprising because women’s participation in the workforce is obviously much higher today than it was when Mike was eating his Froot Loops and playing Atari.
Mike Moffatt: To be fair, that was just last week. But in all seriousness, I imagine parents are having much higher-quality time with their kids than they did in the past.
Cara Stern: I can see how when you’re working all day, you want to be very focused on actively playing with your kids compared to when you have all day to spend with them. This is something I often tell moms who are dreading the end of their maternity leave. There is this angst about going back to work because you feel bad that you’re going to get so much less time with your baby.
What I always tell them is that the quantity of time you spend with your baby decreases when you send them to daycare and go back to work, but the quality goes up. It’s easier to really enjoy that time together when you know it’s limited, rather than feeling like you just have to get through the day until the next nap.
Mike Moffatt: And those kids are now old enough to learn how to play Atari.
Cara Stern: I don’t know if a one-year-old can, though I suspect you did at that age. It’s not just the time cost; you also have to cart all those kids around to sports, school, and daycare. You’ve got to coordinate with your partner about who’s taking which kid and figure out how to manage three different schedules. When I think about three kids, I think about transportation, which is most people’s second-biggest expense after housing. It isn’t cheap to get kids around. SUVs and vans are expensive, which you probably need because fitting three kids in car seats into a sedan is incredibly tight. You need a specialized cargo bike if you’re biking, and transit is tough to wrangle with multiple kids—though at least most cities in Canada have free transit for kids, which helps. Of course, that doesn’t help if you had to drive until you qualified for a place that doesn’t have transit.
Mike Moffatt: That coordination is huge. When you’ve got two kids and two parents, you can play man-to-man defense—”I’ve got him, you’ve got her.” But when the kids outnumber the parents, it’s like killing a penalty in hockey or being a man down in soccer: you have to transition to zone coverage, and that can be tricky.
Cara Stern: When you add it all together, the numbers are brutal for families in urban areas. If a family is doing the math in a two-bedroom in Toronto, Ottawa, or Vancouver and wants a third kid, they look at it and say, “We don’t have the bedroom, we can’t afford to buy the bedroom here, and even if we cleared that housing hurdle, one of us is probably stepping back significantly at work for the next five years.” What happens? They’re going to move out of the city.
Mike Moffatt: We see a lot of that in the Canadian migration data, with large numbers of children under the age of five moving out of the GTA, Metro Vancouver, and Montreal to other parts of the country.
Cara Stern: That happens not just in Canada. A researcher looked at this in Oslo a couple of years ago, surveying nearly 3,000 families in inner Oslo, both those who left and those who stayed. He found about 70% of children born in inner Oslo leave before school age, and the single strongest predictor of which families left was wanting a separate bedroom for each child.
Mike Moffatt: It’s always been the case that you get more space in the suburbs than in cities, but if you want to retain at least some of those families, cities need to legalize building family-sized housing, whether that is at the edge of town, infill, or what have you. You’ve got to be able to build those three, four, or five-bedroom units.
Cara Stern: What does this actually require to solve policy-wise?
Mike Moffatt: The housing piece is the most concrete. Three, four, and five-bedroom family-sized units need to exist in cities at prices that a dual-income professional family can access, not just those in the top 1% or 0.1%.
As a start, that means the planning and zoning system has to stop treating all residential units as equivalent. A three-bedroom unit that houses a family of five serves a fundamentally different purpose than a one-bedroom unit, and our housing policy needs to reflect that. For the last 20 years, we’ve had very anti-family zoning policies in large parts of the country.
Cara Stern: Let’s acknowledge that right now, for the most part, having a third kid in Canada, especially in a city, is a luxury—and it shouldn’t be. People can lower their standards to make it work, but as always when it comes to birth rates, women don’t have to have kids. If the situation doesn’t exist to make it desirable, it will not happen.
Mike Moffatt: It really comes down to affordability.
We see in the data that there is a linear relationship between income and birth rates, and the lowest birth rates are, in fact, among the poorest Canadians because of that relationship.
We might get feedback saying, “Well, low-income people have lots of kids, why can’t the middle class?” But that is simply not true. In Canada, low-income families tend to have very few kids, so it really comes down to this affordability piece across the board that affects both the middle class and lower-income Canadians.
Cara Stern: Thank you so much for watching and listening. Our producer is Meredith Martin, and our editor is Sean Foreman.
Mike Moffatt: And if you have any thoughts or questions about the relative merits of Froot Loops versus Cinnamon Toast Crunch, please send us an email to [email protected].
Cara Stern: And we’ll see you next time.
Additional Reading/Listening that Helped Inform the Episode:
More Crowding, Fewer Babies: The Effects of Housing Density on Fertility
The ultimate status symbol? A big family
Opinion | Three Kids? You Showoffs. - The Washington Post
Why are some families with children leaving the inner city and other staying?
Fertility Incentives in Canada: A Cohort Analysis
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