Two reports highlight the barriers to buying a home in 2025
Canadians hoping to buy a home in 2025 are facing considerable challenges, that mean even getting started with saving for a down payment is impossible for many.
Two separate reports this week highlight the barriers to homeownership being faced by many and while some may have the means to purchase, two thirds are waiting for interest rates to fall before they take the plunge according to BMO’s Real Financial Progress Index. Two in five will wait until rates drop to 3% or lower.
That report also reveals that 74% of respondents are taking a ‘wait and see’ approach to homebuying amid fears of the Canadian economy tipping into recession.
"Canada's housing market remained under pressure heading into the spring, with sales and prices both weakening further," said Robert Kavcic, senior economist, BMO Capital Markets. "There is some clear underlying weakness as inventory builds and investors remain absent. Suffice it to say, homebuyers are losing confidence and motivation, especially in areas of B.C. and Southern Ontario."
More than half of respondents feel that they may have missed their opportunity to buy a home, rising to 66% among millennials. Across the generations, two thirds are less confident that they will ever own their own home in their lifetime than they were five years ago.
Among those who have managed to buy, 43% say they could not have purchased their home without assistance from family.
On a brighter note, the survey found that 70% of Canadians feel confident in their financial situation, but fear of unknown expenses (82%), concerns about their overall financial situation (81%) and housing costs (72%) are among the leading sources of financial anxiety.
A separate survey from CPA Canada and BDO Debt Solutions found that saving for a down payment to buy a home is the biggest barrier to homeownership for one in three people right now.
Another 30% say the ongoing cost of mortgage payments is their main obstacle to owning a home, while just 10% of respondents say they prefer the flexibility of renting. With 43% of all respondents reporting the high cost of living as their top financial challenge and another 14% pointing to paying down debt, many Canadians are struggling to manage day-to-day expenses, let alone save for a home.
“Like sucking the oxygen out of a room, rising housing costs in Canada leave little left for consumers to spend in the overall economy,” says David-Alexandre Brassard, Chief Economist at CPA Canada. “High down payments restrict access to real estate investments and exacerbate wealth inequality, leading to social consequences.”
The generational divide is clear with 74% of those aged 55 and older owning their homes, compared to 63% for those aged 35 to 54, and just 31% for those aged 18 to 34.
Among those already homeowners, almost half are focused on savings, compared with just 12% of renters and non-homeowners, and 28% of homeowners say their top financial goal is saving for retirement or long-term investments.
