The great Canadian dream of homeownership is slipping away from those who don’t currently own property.
According to a new study conducted by Chartered Professional Accountants of Canada (CPA Canada), the prospect of homeownership remains far from reach for countless Canadians.
The Housing Headache study found that half of Canadians who do not currently own a home believe it is unlikely that they will ever be able to purchase one. And, while the other half are optimistic about homeownership, only one in five (21%) think it is very likely they’ll enter the housing market, while 29% think it is just somewhat likely.
Currently, just over half of respondents own a house (53%), while 45% rent or lease. The study dived deeper into the reasons that prevent renters from becoming owners and, not surprisingly, 89% of respondents cited the threat of interest rates increasing as the greatest challenge to owning their own home.
Speaking of interest rates, the Bank of Canada announced just today that it would make a half-point rate hike for the second announcement in a row.
Other hurdles to homeownership include affording a down payment (84%), affording renovations (83%), lack of affordable housing in desired neighborhoods (83%), affording taxes and mortgage payments (81%), and income stability (69%).
“Homeownership remains a priority for many, yet what it takes to get there for so many Canadians is becoming increasingly challenging,” said Doretta Thompson, CPA Canada’s financial literacy leader. “The popular wisdom used to be to buy the largest house you could possibly afford, however, it’s important to define your personal goals, balance them with means and look to multiple ways to ensure financial security. Owning a physical asset isn’t the only definition of success.”
According to the research (and unsurprisingly), there are gender and generational divides when it comes to the prospect of homeownership. Across the board, women tend to be more likely than men to view homeownership considerations as representing challenges for them. For example, interest rate hikes are a concern for 93% of women compared to 85% of men; furthermore, affording a down payment is daunting for 86% of women versus 81% of men.
Additionally, 31% of parents with an adult child(ren) living in their houses report that their kids are still living at home because housing is too expensive. Despite this, of those who currently don’t own a home, three in four Gen Z respondents and seven in 10 Millennials remain confident they will buy a house in the future. While their rates of current homeownership are much higher than the younger cohorts, of those older Canadians who do not own a home, optimism about ever doing so is much lower at just 38% for Gen X and 13% for Boomers.
Well, the prospect of homeownership may be a bleak one to some who currently don’t own property, but that doesn’t mean that life’s a walk in the park for Canadians who own their homes. Not in this market.
In fact, many are struggling with the very things renters identified as barriers to homeownership. Three in five homeowners say that affording necessary renovations is challenging for them, meanwhile, 46% are struggling with the costs of basic home maintenance. Two in five indicate that mortgage payments and property taxes are hard to keep up with, while 35% find utility payments challenging.
Furthermore, there is room for optimism for those who don’t own property. Although homeownership feels far away for many Canadians, it doesn’t mean the goals of a happy lifestyle and long-term financial security are beyond reach, says Thompson.
“Shifting your mindset and taking a hard look at expectations can be a good place to start when it comes to managing the housing headache,” stated Thompson. “Weigh your needs against wants and consider what you can afford based on your income and lifestyle. For some, that may mean rethinking the size and or location of a housing purchase. For others, it might mean a longer-term rental strategy — or even an indefinite rental strategy — with complementary saving and investment goals to secure your long-term financial future.”