Canada's Housing Gridlock: Why Homeowners Are Freezing Out First-Time Buyers

TORONTO, ON – April 07, 2026 – The Canadian dream of homeownership is facing a new, insidious threat: gridlock. A landmark new survey from CPA Canada reveals a housing market that is increasingly stagnant, with a majority of current homeowners choosing to stay put, effectively shutting the door on a generation of aspiring first-time buyers and exposing a deep chasm between what Canadians want and what is being built.

The findings paint a picture of a market stuck in neutral. More than half of all homeowners (55 per cent) have no plans to move from their current home in the foreseeable future. This immobility is choking off the supply of available properties, particularly the starter homes that have traditionally served as the first rung on the property ladder.

“This suggests a housing market that is increasingly stuck, with many homeowners holding onto starter homes longer than expected,” says David-Alexandre Brassard, CPA Canada’s chief economist. “Limited movement is reducing turnover and slowing overall market activity.”

The Great Stagnation

Driving this market paralysis is a potent mix of economic anxiety and financial reality. While 55 per cent of homeowners are staying by choice, a staggering 61 per cent of those who do want to move find themselves sidelined. They are trapped, either waiting for market prices to improve or facing financial constraints that make a move impossible. This sentiment is echoed in other recent studies, with one report from Financeit indicating that 94% of homeowners planned to stay in their homes for at least the next year, many citing the rising cost of living.

Compounding the issue is the quiet disappearance of the downsizing trend. For years, market analysts predicted a wave of baby boomers would sell their large family homes, freeing up inventory for younger families. The CPA Canada survey pours cold water on that theory, revealing that only 19 per cent of Canadians aged 55 and older are planning to downsize. This reluctance means larger, family-sized homes remain off the market, forcing would-be buyers to compete for a dwindling and increasingly expensive pool of properties.

“Meanwhile, expected downsizing among older Canadians remains modest... making it harder for first-time buyers to enter the market,” Brassard notes.

A Mismatch of Supply and Dreams

The crisis isn't just about a lack of movement; it's also about a fundamental disconnect between housing demand and new construction. The classic single-family home with a small yard remains the aspirational touchstone for about half of all non-homeowners. Yet, these types of dwellings—including townhouses—account for only about one-third of new housing starts.

Instead, developers, hemmed in by costs and regulations, have focused on high-rise condominiums. But these are a less popular option, with the survey finding that just 15 per cent of non-homeowners name them as their preferred choice. Fewer than one in ten Canadians now see a starter condo as a viable first step onto the property ladder.

This supply-demand mismatch is rooted in decades of municipal policy and escalating costs. Vast swaths of major cities, sometimes called “yellow belts,” are zoned exclusively for single-family homes, making it illegal to build denser, more affordable “missing middle” housing like duplexes or small apartment buildings. In Toronto, for example, an estimated 70% of land is locked into this low-density zoning.

At the same time, the cost to build has skyrocketed. Since 2020, the cost to construct a residential building in Canada has surged by 58 per cent, driven by labour shortages, high interest rates, and soaring material prices. When combined with lengthy and bureaucratic permit approval processes, building the homes people actually want has become an economic and logistical nightmare for developers.

The New Price of Admission: The Bank of Mom and Dad

Faced with a stagnant market and sky-high prices, the path to homeownership has fundamentally changed. It is no longer a journey one can reliably make on income alone. The survey reveals that homeownership is increasingly dependent on external financial support, a reality that is widening the wealth gap between the haves and the have-nots.

Nearly 60 per cent of current homeowners received financial help to purchase their first home, with a third of them receiving more than $50,000. Furthermore, 71 per cent share housing costs with a partner or relative, underscoring the necessity of dual incomes or shared finances.

“The path to homeownership increasingly depends on factors beyond income alone,” says Li Zhang, financial literacy leader at CPA Canada. “Without that support, entering the market becomes significantly more difficult.”

This reliance on what’s often called the “Bank of Mom and Dad” has become a defining feature of the market. Data from CIBC shows that the share of first-time homebuyers receiving financial gifts from family rose to 31 per cent in 2024, with the average gift surging to $115,000. This influx of parental cash, totaling billions annually, props up demand and further inflates prices, making it even harder for those without family wealth to compete. A 2023 Statistics Canada study confirmed this advantage, finding that children of homeowners are twice as likely to own property themselves compared to children of renters.

Can Policy Unlock the Market?

Governments at all levels are aware of the crisis and have launched a flurry of initiatives. The federal government’s $4 billion Housing Accelerator Fund (HAF) aims to incentivize municipalities to break their zoning paralysis and fast-track new construction. Cities like Edmonton, which eliminated single-family zoning city-wide in 2024, have seen a subsequent 30% jump in approved dwelling units, offering a potential blueprint for others.

These programs are part of the broader National Housing Strategy, a multi-billion-dollar plan aiming to create hundreds of thousands of new housing units. The 2024 federal budget doubled down, setting a goal to unlock nearly 4 million new homes by 2031.

However, these long-term policy solutions offer little immediate relief. Even as some cities begin to reform, the sheer cost of construction and persistent labour shortages remain formidable barriers. Economic forecasts from institutions like RBC suggest that even with anticipated interest rate cuts, affordability will remain dire, and any market recovery will be a slow, grinding process. The failure of past programs like the First-Time Home Buyer Incentive, which saw limited uptake, serves as a stark reminder that there are no simple fixes to a problem this deeply entrenched in the Canadian economy and psyche.