Forever home replaces starter home as buyers delay ownership and rethink strategy

Homeownership remains a defining financial goal for most Americans, but a growing number are rethinking how and when they get there, according to new research from BMO.

The latest Real Financial Progress Index shows nearly three-quarters of Americans still view owning a home as a key life ambition, yet affordability pressures and market conditions are pushing first-time purchases further down the road.

The report highlights a fundamental shift: with Americans now expecting to buy their first home at age 40 on average, the traditional “starter home” is giving way to a “forever home” approach. That represents a sharp increase from the early 1990s, when first-time buyers typically entered the market at age 28.

This delayed entry is reshaping buyer behaviour. A majority—65%—of aspiring homeowners say they expect their first purchase to be their only one, reinforcing the move toward longer-term housing decisions.

Interest rates remain a key obstacle. While about two-thirds of prospective buyers say borrowing costs are influencing their decisions, more than half are choosing to wait for further rate declines rather than act now. Only a small share say recent rate cuts have prompted them to begin house hunting.

"The American dream of owning a home is still alive and well, even if the market is presenting challenges that require new financial strategies for many to achieve this dream," said Paul Dilda, Head of U.S. Consumer Strategy at BMO. "When prices and rates are high, your best offense is a good defense: a smart budget and a financial partner who can review your full financial picture to help you secure the best terms within your means so you can get those keys in hand."

More than half of respondents say rising home insurance costs and climate-related risks could affect their ability to buy or keep a home, or influence where they choose to live.

The financial trade-offs are significant. Many Americans now prioritize saving for retirement, paying down debt, or covering childcare and education costs ahead of homeownership. Even among those planning to buy, 44% say they would consider tapping retirement savings to fund a purchase.

At the same time, a growing share of non-homeowners are losing confidence. More than half—55%—say owning a home feels out of reach in their lifetime, reflecting mounting pessimism despite continued demand.

Family dynamics are also playing a larger role in housing decisions. Among Millennials, 54% identify as part of the “sandwich generation,” balancing care for both children and aging relatives. Two in three Millennial homeowners say it was important to purchase a home with enough space to accommodate parents or grandparents.

This shift is contributing to a broader rethinking of what a home is for. Younger buyers increasingly view properties as multi-purpose assets, designed to support extended family and generate income. About 60% of Gen Z and Millennial homeowners say they plan to use their homes to earn rental income.

Nearly three-quarters of buyers say they expect to use AI tools to navigate the process, from understanding mortgage options to calculating affordability and navigating legal requirements.

Despite these evolving strategies, activity remains subdued. Only 14% of non-homeowners say they plan to purchase within the next year, down slightly from the prior year, underscoring how affordability challenges continue to sideline potential buyers.

As the research suggests, Americans are not abandoning the goal of homeownership, but they are adapting to a new reality, where buying later, buying once, and buying strategically has become the new norm.