Dream of home ownership still alive for majority of Canadians: RBC

67% of Canadians say they’ve always longed to own a home, according to an RBC January poll — a rise of 5 percentage points since 2025. Despite a complex and uncertain housing market, the persistent homeownership aspiration signals continued underlying demand that could support housing-sector activity and related consumer spending.

Analysis

Persistent home-ownership aspirations create a reservoir of demand that can be monetized in stages: mortgage origination and refinancing if rates ease, HELOC/renovation spend when transactions occur, and ongoing rental-to-own transitions in tight markets. Even a modest conversion rate from aspiration to transaction (low single-digit percent annually) materially lifts mortgage volumes versus a scenario where sentiment is flat, because mortgage flows are concentrated and high-margin at the point of sale.

Banks with large retail footprints and mortgage distribution networks capture the first-order gains through origination fees and cross-sell; mortgage insurers and captive broker networks capture second-order economics via placement fees and higher MSAs. Conversely, the supply chain winners are regional builders, lumber and appliance vendors who see lumpier but higher-ticket demand; their revenue can outpace headline resale volumes by 6–12 months as projects and renovations lag closings.

Catalysts that convert sentiment into realized earnings are rate moves, credit availability, and targeted policy (first-time buyer incentives, CMHC rules). These operate on different horizons: rate/cycle moves act in months, policy takes quarters, and demographic shifts play out over years. Reversal risks are clear — a sharp rate shock, a spike in unemployment, or a politically driven restriction on speculative purchases would collapse conversion and hit bank provisioning within one quarter.

The consensus is optimistic on demand but underweights distributional effects: modest increases in transactions will disproportionately help deposit-rich, retail-heavy banks and mid-market builders, while large-cap builders focused on luxury urban inventory may underperform. Plan around asymmetric outcomes rather than a binary housing boom/bust framework — positioning should capture incremental volume upside while keeping duration exposure to rates capped.

Key Decisions for Investors

• Buy RY 12–18 month call spread (debit) to capture origination/refi upside if Canadian rates ease: size to 1.5–2% NAV. Target asymmetric return 20–40% if mortgage volumes recover; max loss = premium paid. Close on: Canadian 5-year yield down 40–50bps or RY implied vol compression beyond 30%.
• Long Canadian Apartment Properties REIT (CAR.UN) for 6–18 months to play rental tightness and conversion pressure into mid-market condos: target total return 15–25% (6–8% cash yield + price appreciation). Risk: 12–18% drawdown if long-end yields spike; use 8–10% position sizing.
• Pair trade (relative value): Long RY / Short BNS (6–12 month horizon) — RY benefits more from retail mortgage flow and deposit insulation while BNS is more trade/commodity sensitive. Aim for 8–15% relative outperformance; stop-loss if spread moves >6% adverse or Canadian policy changes mortgage-insurance rules.
• Maintain a 2–4% NAV sleeve in short-dated protection on high-duration housing equities (buy puts or inverse ETF exposure) to guard against rapid rate spikes or a policy-induced transaction shock. Close protections if core inflation prints <2.5% for two consecutive months and rate volatility normalizes.