09/09/2014 03:03 EDT | Updated 09/11/2014 09:59 EDT

House Price Gap Grows, Making Dream Home A Fantasy: CIBC

If you’ve bought a condo and are hoping to upgrade to a single-family home someday, you may end up waiting longer than you expected.

According to a report from CIBC World Markets, the long run-up in Canadian house prices is making it harder and harder for families to move up to their dream home.

At the same time, tighter mortgage rules and soaring prices are pushing many young Canadians out of the housing market, CIBC economist Benjamin Tal wrote in the report.

The home ownership rate among Canadians aged 25 to 35 fell to 50 per cent this year, from 55 per cent in 2012, the report said. The rate remained stable for those over 35.

But the run-up in house prices in recent years means that many households are unable to make the jump from starter home to dream home.

That’s because prices have been rising faster at the higher end of the housing market than they have been at the lower end of the market, Tal wrote, meaning the spread between house prices is growing.

“In other words, regardless of what your starting point is, and by how much your property has appreciated, the desired move-up target is getting further and further out of reach,” Tal wrote.

This phenomenon is most pronounced in Calgary, Edmonton, Ottawa and Toronto, Tal said. In Vancouver, almost all of the increase in single-family home prices has been in the $1.1-million-plus range, Tal noted, meaning “upgrade options in the city are becoming even less affordable.”

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This problem doesn’t seem to exist at the very top end of the housing market, which Tal notes is the only segment of the housing market to see an increase in listings recently.

So instead of moving up, Canadians are renovating the homes they already own instead, Tal said. Home renovations now account for nearly 46 per cent of residential investment, the highest percentage on record.

But the fact more Canadians are staying put in the homes they own mean fewer are selling low-end homes, which will mean a tighter supply of low-end homes, Tal predicts. That should support prices at the lower end of the housing market.

“The higher end segment of that market appears to be more vulnerable to price adjustments,” he wrote.

Tal sees the condo boom in some of the country’s largest cities as having had a “stabilizing effect” on the housing market, giving new home buyers more options as single-family home prices grew out of reach.

All the same, the cycle of starter home and move-up home that dominated Canada’s real estate market “is breaking,” Tal concludes.

The CIBC report came the same week as conflicting new data on Canada’s residential real estate market. StatsCan on Monday reported a record high number of building permits issued, but Canada Mortgage and Housing Corp. said Tuesday that housing starts fell unexpectedly.