Interest rates, affordability and availability pose challenges

Half of non-homeowners unlikely to enter housing market, says new CPA study

Despite historically being one of the top life goals for Canadians, the prospect of home ownership for non-owners remains far from reach, according to a new study conducted by Chartered Professional Accountants of Canada.

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 home ownership, only one-in-five (21 per cent) think it is very likely they’ll enter the housing market, while 29 per cent think it is just somewhat likely.

The hurdles to home ownership

According to CPA Canada’s Housing Headache study, currently just over half of respondents own a house (53 per cent), while 45 per cent rent or lease. The study dived deeper into the reasons that prevent renters becoming owners and, not surprisingly, 89 per cent of respondents cited the threat of interest rates increasing as the greatest challenge to owning their own home. Other hurdles cited include:

  • Affording a down payment (84 per cent).
  • Affording renovations for 83 per cent, meanwhile an equal number cite housing availability in their desired area as a challenge.
  • Affording taxes and mortgage payments are equal at 81 per cent.
  • Income stability worried 69 per cent.

“Home ownership 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.”

CPA Canada financial literacy leader Doretta Thompson.

Gender and generational divides

Across the board, women tend to be more likely than men to view home ownership considerations as representing challenges for them. For example, interest rate hikes are a concern for 93 per cent of women compared to 85 per cent of men and affording a down payment is daunting for 86 per cent of women versus 81 per cent of men.

Additionally, 31 per cent of parents with adult children living in their house 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 per cent for Gen X and 13 per cent for Boomers.

Homeowners still face challenges

The housing headache persists for those who do own their homes. Many Canadians are struggling with the very things that renters identified as barriers to home ownership:

  • Three-in-five homeowners say that affording necessary renovations is challenging for them; meanwhile, 46 per cent 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 per cent find utility payments challenging.

Easing the housing headache

Although home ownership feels far away for many Canadians, it doesn’t mean the goals of a happy lifestyle and long-term financial security are beyond reach. “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.”