Canadian renters wait to buy homes in 2025 – As Canada’s housing market experiences a long-awaited shift towards improved affordability, many expected a wave of first-time buyers to finally make the leap from renting to owning. With interest rates gradually easing and home prices softening across major cities, the conditions appear ripe for a buyer’s market. Yet a surprising trend is unfolding: many Canadian renters are still choosing to stay on the sidelines.
A recent survey conducted by Royal LePage® and Burson found that more than a quarter of Canadian renters considered buying a property before renewing their lease—but ultimately chose not to. Despite improving affordability metrics, lingering financial uncertainty, high rent-to-income ratios, and cautious buyer psychology continue to delay the dream of homeownership for many.
In this blog, we’ll explore the complex landscape behind this hesitation, including renters’ financial concerns, evolving market trends, psychological barriers, and the wider socio-economic forces shaping this moment in Canadian housing.
1. The State of Canada’s Housing Market in 2025: A Window of Opportunity?
After years of relentless price increases and rising mortgage rates, Canada’s real estate market is showing signs of moderation.
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Interest Rates Trending Lower: After the Bank of Canada aggressively raised interest rates in 2022 and 2023 to combat inflation, we’ve entered a period of easing. Lower borrowing costs are reintroducing affordability for prospective buyers who were priced out just a year or two ago.
Home Prices Cooling in Major Cities: With inventory levels rising—thanks to increased new construction, investor sell-offs, and moderated demand—home prices in once overinflated markets such as Toronto and Vancouver have pulled back from record highs.
Income Growth Catching Up: Incomes in many sectors are seeing upward momentum, helping to close the affordability gap between earnings and housing costs.
So why, in the face of these more favourable conditions, are renters not flocking to the ownership market?
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2. What the Data Tells Us: Renters Are Hesitant – But Still Hopeful
According to the Royal LePage® survey, 28% of renters said they considered purchasing a home before renewing or signing their latest lease. Among those who decided against it, the top reasons included:
40% waiting for prices to fall further
29% hoping interest rates will continue to drop
28% saving for a down payment while continuing to rent
Clearly, renters are not rejecting ownership entirely. Rather, they are taking a more strategic and cautious approach, choosing to monitor the market and build financial stability before jumping in.
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More than half of surveyed renters (54%) indicated plans to purchase a home in the future:
16% plan to buy within the next two years
21% plan to buy in two to five years
This suggests the intent to own remains strong—just delayed.
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3. Why Many Are Still Pressing Pause on Buying a Home
A. Psychological Anchoring to Past Market Trends
Many renters remain psychologically anchored to the recent highs in real estate prices and interest rates. Even though prices have declined, a sense of uncertainty persists. Renters worry that buying now might mean entering the market just before another dip.
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B. Cautious Optimism vs. Economic Uncertainty
Despite signs of recovery, economic instability remains a reality for many Canadians:
Persistent inflationary pressure on essentials
Fears of job insecurity in some industries
A cautious outlook on long-term economic growth
These fears, combined with the emotional weight of a 25- or 30-year mortgage, are causing many renters to delay making what may be the biggest financial decision of their lives.
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C. Down Payment Hurdles Remain High
Even with softer prices, coming up with a 5% to 20% down payment remains a major barrier—especially in expensive markets like the GTA, Vancouver, and Ottawa.
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Median home price in Toronto (Spring 2025): ~$900,000
10% down payment: $90,000
Saving that kind of capital while paying high rent, managing student debt, and dealing with inflation in food and transportation costs is challenging, particularly for younger buyers.
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4. Rising Rents: A Double-Edged Sword
You might assume that falling rents would ease the burden on renters and help them save for a down payment. But the data tells a more complicated story.
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Rents Have Declined Slightly – In May 2025, the average price of a one-bedroom rental in Canada dropped to $1,857 (a 3.6% decline YoY), while two-bedroom units fell to $2,225 (down 4.6% YoY).
But Rents Are Still Historically High – Compared to three years ago, national rents are up over 12.6%. Over five years, asking rents have increased by an average of 4.1% annually—outpacing wage growth in many sectors.
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This means that while renters may be getting a bit more for their money (e.g., better amenities or larger space), they’re still spending a significant share of their income on housing. According to the Royal LePage survey:
37% of renters spend 31% to 50% of their income on rent
15% spend more than half their income on rent
Only 37% spend 30% or less
This leaves little room for saving—especially when combined with other financial pressures.
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5. Financial Sacrifices: The Hidden Cost of Renting
To make ends meet, many renters are forced to make hard financial choices. According to the survey:
40% cut back on groceries and food spending
30% reduced contributions to retirement or savings
21% are accumulating credit card debt
20% have taken on a second job or side hustle
These numbers paint a sobering picture. Even in a declining rent environment, the financial stress remains high for many Canadians. That financial pressure makes the prospect of homeownership feel not only distant but risky.
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6. A Tale of Two Renters: Those Who Will Buy vs. Those Who Won’t
Interestingly, 31% of renters surveyed said they have no plans to ever purchase a home.
Among those, the most common reasons included:
53% say their income won’t allow them to buy in the area they want
40% believe renting is still more affordable
40% don’t want the responsibilities that come with owning property
This underscores a permanent shift in mindset for some Canadians—especially in urban centres where renting offers convenience, flexibility, and access to amenities that ownership may not.
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7. Why Some Experts Say Now Is the Time to Buy
Phil Soper, president and CEO of Royal LePage, believes we may be at a turning point. In his words:
“History suggests they may be disappointed… Over the past 75 years, Canadian home values have risen approximately 5% annually, running consistently ahead of inflation.”
If that historical trend holds, the current dip may be a short-lived buying opportunity—especially as incomes rise and interest rates decline further.
For strategic renters with savings and secure employment, entering the market now may allow them to lock in lower prices and benefit from future appreciation.
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8. New Supply: Easing the Pressure on Rent and Ownership
Another important factor easing pressure in both rental and resale markets is supply.
Purpose-Built Rentals and Condo Completions: A wave of new projects has hit the market in major cities. This has boosted inventory and helped stabilize prices, giving renters more negotiating power and buyers more options.
International Student Cap: A cap on international student permits has slightly reduced rental demand, particularly in markets near universities, opening up more units and slightly lowering rent prices.
Still, the market remains tight in key areas, and any reversal in construction trends or immigration policies could rapidly swing the balance again.
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9. Policy Measures Are Needed – But Will They Arrive in Time?
While market forces are offering short-term relief, long-term affordability remains elusive. Soper rightly pointed out the need for “meaningful policy action.”
Some areas of focus should include:
Expanded Incentives for First-Time Buyers: Greater access to tax credits, down payment assistance, and low-interest mortgage programs can bridge the affordability gap.
Support for Affordable Rental Housing: More investment in purpose-built rental housing, especially in urban cores, would reduce pressure across both the rental and ownership markets.
Zoning Reforms: Updating zoning regulations to allow more “missing middle” housing (townhomes, multiplexes) could create more attainable ownership options for renters.
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10. Conclusion: A Market in Transition – and a Moment for Strategic Action
Canada’s housing market in 2025 is at a crossroads. Falling interest rates and cooling home prices should, in theory, open the door to more renters becoming owners. But psychological caution, affordability hurdles, and continued financial stress are slowing that transition.
Yet history, economic fundamentals, and current trends suggest this moment may be a rare opening—one where those prepared to act strategically could benefit from lower purchase prices, growing incomes, and improving affordability metrics.
For renters, the decision to buy shouldn’t be rushed—but it also shouldn’t be delayed indefinitely out of fear. Each household must assess their financial readiness, job security, and long-term goals. But the opportunity may not linger long.
As the market stabilizes and confidence returns, the competition for entry-level homes could heat up again. Renters who have done their homework, improved their credit, and saved their down payments may soon find this moment was the best time to enter.
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Key Takeaways
28% of renters considered buying before renewing leases but held off due to price and rate concerns.
54% still plan to buy in the future; 37% never plan to purchase.
Rental prices have softened but remain high historically, squeezing savings.
Many renters are making financial sacrifices just to afford housing.
Experts warn the window for affordable buying may close quickly.
Final Thought: Whether you’re a renter cautiously watching the market or a prospective first-time buyer ready to jump in, understanding the evolving real estate landscape is crucial. While no one can perfectly time the market, being informed, financially prepared, and realistic about goals will put you in the best position to make the move when the time is right.