Canada's Home Ownership Myth Exposed

As house prices have risen over the past two decades, home ownership has become increasingly difficult for young households in Canada, despite strong support through public policy.

But becoming a homeowner is still a goal for many young people who want a level of residential stability that is difficult to achieve by other means.

As urban studies researchers at Québec's Institut national de la recherche scientifique (INRS), we carried out in-depth interviews with some 20 households in the Montréal area to better understand young people's aspirations for home ownership in this difficult period.

Home ownership support schemes

The best-known scheme to encourage home ownership is probably the First Home Savings Account ( FHSA ), but there are other programs, including the Home Buyers' Plan , that allows people to withdraw funds from a registered retirement savings plan (RRSP) to purchase or build a home.

The federal government insures mortgages through the Canada Mortgage and Housing Corporation (CMHC), which increases the availability of capital for the purchase of a residential property.

Several municipalities also offer incentives for first-time buyers. For example, depending on the status of the household and the property, a new homeowner in Montréal could receive financial assistance from the city ranging from $5,000 to $15,000. Québec City, for its part, offers families who meet certain eligibility criteria interest-free, no-payment loans for 5.5 per cent of the purchase price of a new home to supplement a downpayment.

Canada does enough … for homeowners

Yet in addition to government measures to encourage first-time home buyers, there are other, more significant and often less well-known measures in place that enrich existing homeowners. These represent a major incentive to join the ranks of homeowners.

This is the case, for example, with the capital gains tax exemption for primary residences, which means that the profit made on the resale of your home is not taxable. This subsidy, worth around $15 billion per year, exceeds the annual budget of Canada's National Housing Strategy .

A more esoteric concept is that of " imputed rent ," the estimated rental value of an owner-occupied home representing the hypothetical rent a homeowner would pay to live in their own property if they were a tenant.

Unlike in the Netherlands and Switzerland , imputed rent is not taxable in Canada. This absence of taxation favours homeowners , because if the owner decided to rent out the property rather than occupy it, they would pay tax on that income, which is ultimately paid by the tenant.

Home ownership, as it is promoted in Canada, seems like a "false promise." The policies in place mean young people and low-income households are gradually being excluded from the wealth accumulation opportunities home ownership offers. Under these conditions, housing becomes a vector of significant inequality.

Policies work for ownership, not renting

Canadian and provincial public policies disadvantage renters, making home ownership even more desirable. Current policies are moving away from the social and community housing model, where rents are determined based on a household's ability to pay. Instead, policies promote "affordable" housing relative to market value, with rents that are below market rates but sometimes still out of reach for low-income households.

In the rental sector in Québec, market pressure is highlighting the limitations of the province's tenant protection regime through rent increases, repossessions and renovictions .

By allowing landlords to refuse a lease transfer without serious cause , Québec's Bill 31, passed in 2024, eliminated one of the last means tenants had to find an affordable apartment .

A variety of motivations for home ownership

The research we conducted among young households aspiring to home ownership in the Montréal area reveals a variety of motivations. While all of the households we interviewed face difficulties in becoming homeowners, buying a house is not a goal in itself for most of them.

Some want a suitable space for their young children, which they have difficulty finding in the rental market. Others see home ownership as a good investment. Many are worried because of past experiences of residential insecurity, or express fears about the possibility of renovictions, rent increases or neglectful landlords in the rental market.

Many of them are not actually opposed to long-term renting. They're attached to life in their neighbourhood: since buying a property often requires moving to another neighbourhood with lower prices, renting often remains a desirable option for them. In addition, buying is often perceived as a financial stretch, which brings risk rather than stability.

Policies that promote home ownership

In light of this diversity of motivations, is it time to rethink public policies that promote home ownership?

Instead of promoting home ownership in the hope it will meet households' needs, our housing policies should address those needs directly.

Taking into account the scientific literature on the subject, policy should promote residential stability or security, regardless of the type of occupancy, by implementing an approach focused on a "tenure-neutral housing policy." Unlike current policies, this approach does not favour one type of tenure over another.

Our housing policies should, in the same way, increase funding for social and community housing and encourage the construction of flats that meet the needs of households with children , for example, by having better soundproofing and access to an inner courtyard.

Finally, they should strengthen tenant protections against excessive rent increases, renovictions and discrimination.

Reducing dependence on property ownership

The appeal of property as an investment remains undeniable. Encouraging other types of investment, such as mutual funds or stocks, would have the dual advantage of diversifying households' investment opportunities and freeing up capital that is now being invested in property strictly because of price increases, not increased supply.

Improvements to public pension plans would mean that buying a property would not be seen as an essential step to securing a financial future .

But several factors work against overhauling housing policies. Approximately two thirds of Canadian households, and the majority of Québec households , presently own their homes. It would be politically difficult to reduce the benefits this electoral bloc enjoys in order to implement more equitable solutions.

Yet it is essential to keep this debate alive, especially to ensure housing security for households that will inevitably be excluded from home ownership.

Nick Revington received funding from the Fonds de recherche du Québec (FRQ) and the Social Sciences and Humanities Research Council of Canada (SSHRC).

Emory Shaw received funding from the Fonds de recherche du Québec (FRQ).

Mathiaz Lazo Mackay received funding from the Fonds de recherche du Québec (FRQ).