What to know
- An RBC poll found that 72 per cent of Ontarians believe the idea of a starter home has changed compared with previous generations.
- Some 58 per cent of Ontario respondents would rather buy a home they can stay in longer than one they might outgrow.
- Current homeowners reported buying their first home at an average age of 29, while non-homeowners expect to buy at 41.
- RBC’s Janet Boyle says affordability concerns and changing buyer priorities are contributing to the shift.
- Starter homes can still be a worthwhile investment for buyers looking to build equity, depending on their budgets and long-term goals.
Years ago, many Canadians would build equity by buying a smaller home located away from their ideal area just to move out years later when they could afford their forever home. Now, most are choosing to wait and save to buy their dream property right away.
RBC’s latest Home Ownership Poll, published earlier this week, revealed that 71 per cent of Canadians believe the idea of a “starter home” has changed now compared to past generations. The same belief seems to follow through in Ontario, where 72 per cent of respondents said the same.
Reflecting the trend, 61 per cent of Canadians and 58 per cent of Ontarians say they would rather buy a home they can stay in longer than one they might outgrow.
But if the former strategy seemed to work for other generations, why are homebuyers suddenly giving up on the starter home?
Now Toronto spoke with Janet Boyle, Senior Vice President of Home Equity Finance at RBC, to find out what is driving this switch and whether buying in a starter home could still be a good investment.
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What is a ‘starter home’?
As explained by Boyle, home ownership has long been a part of Canadian culture and a dream for many residents in the country. However, with steep prices across major Canadian real estate hubs, like Toronto or Vancouver, many might find it difficult to save for a sufficient down payment or mortgage approval.
In hopes of being able to still reach homeownership and start building equity, many would often choose to compromise on location or size for a cheaper property where they would move in temporarily.
Once they had their foot in the door and were able to save further or sell their “starter home,” they would then invest in a home that fit their desired criteria where they could live long term.
“People would look at getting into a home as the priority, so it might not have had all the features that they wanted… but they scraped together their down payment, so they were getting into what we would call their first-time or a starter home that was likely a lower cost,” Boyle said.
Why did the ‘starter home’ notion change?
As prices climbed down after the pandemic, the expert said many potential buyers started to re-evaluate this strategy, with many choosing to take more time to save in order to buy their forever home right away rather than first moving into a “starter home.”
“They’ve taken more time to save. They’re indicating that maybe they don’t want to sacrifice having a backyard because they really want to get a pet, or they don’t want to sacrifice getting outside of a neighbourhood that they really like, or that’s really close to wonderful amenities or great schools,” Boyle said.
“They’re deciding that that first home is really going to be their forever home.”
Although many reasons could be behind the generational shift, the expert said a big part of this could be the fact that home prices have significantly dropped after the pandemic.
While buyers might have had to compromise and settle for something they could afford rather than choose their ideal home before, now they are able to get more on their budget.
“We’re seeing that people’s dollars and their budget can stretch a bit more. They can get more of a home or a property in a different location that’s more desirable to them,” she said.
Canadians are buying homes later in life
On average, current homeowners said they were able to buy their first home at 29 years old. But Canadians who still don’t own a home on average said they believe they will be 41 years old before they can purchase.
There could also be many reasons behind this average age expectation, including buyers’ personal priorities. However, Boyle said a big part of the 12-year gap could come from affordability concerns.
“It is more expensive. Life is more expensive. People are saving longer for the down payment, so they’re really being diligent in planning and putting the money away, and they’re trying to save as much as they can before they buy the home,” she explained.
Many say buying a home is now more complicated
Meanwhile, most Canadians say buying a home in 2026 has gotten a lot more complicated than it used to be years ago.
Nationwide, 74 per cent agreed that home ownership is now more complicated, while 75 per cent of Ontarians say the same.
According to Boyle, a lot of this could be solely buyers’ perceptions, but in other ways, buying a home might truly have become more challenging over the years, especially when it comes to affordability.
Over the last few decades, prices have significantly jumped up, and so the amount needed for a down payment or to qualify for a mortgage also has increased. Being required to pay more requires Canadians to consider home ownership more deeply than they used to do.
In addition, Boyle said today’s buyers have more issues to take into consideration, including the country’s economic and political situation and how it could impact their ownership.
“A lot of external factors that are impacting not just in Ontario but in Canada broadly. When we think about inflation, we’re seeing prices of everything going up. We’re seeing a lot of global unrest. This is on a lot of people’s minds,” she said. “A lot of factors have changed, so there is more complexity.”
Is a ‘starter home’ still a good investment?
Between buying a home later in life and having more to consider before buying, the “starter home” seems to have stayed in the past for many Canadians. But does the investment still make sense?
For Boyle, depending on buyers’ needs and budget, it absolutely still does, despite what the numbers say.
With homeownership remaining a dream for many, the expert said it might make sense for people to first find something that fits into their budget, and will allow them to build equity and later save for a longer-term property.
“A lot of people will get to the stage [when] they feel like [they’re] ready. If you’re ready, and your budget says, ‘This is the home that you can afford,’ and you think, ‘Well, this maybe isn’t where I’m gonna end up, but I’m really excited about this opportunity.’ Then yes, it is still a good investment,” Boyle said.
“There’s a lot of comfort to people when they’re purchasing a home for the first time. That this is something that’s theirs. It’s a roof over their head… It’s a place to call your own.”
