Sotheby's International Realty Canada

Sotheby's International Realty Canada

April 08, 2015 08:00 ET

Evolving Generational Trends to Shape Future of Canadian Luxury Real Estate, According to Sotheby's International Realty Canada Report

Top-Tier Generational Trends Report Reveals Emerging Differences in Real Estate Preferences Between Boomers, Generation X and Generation Y

VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 8, 2015) - A new report released today by Sotheby's International Realty Canada provides insight into the luxury home buying trends of three key generations in Canada: baby boomers, generation X and generation Y. The report further reveals the slated future impact of each generation on the high-end real estate market, and examines generational variances across Canada's largest urban centres: Vancouver, Calgary, Toronto and Montreal.

Based on an in-depth survey of top agents and market leaders within the Sotheby's International Realty Canada network, the Top-Tier Generational Trends Report: A Comparative Survey of Top-Tier Real Estate Trends Across Generations in Canada identifies the baby boomer generation as wielding the most influence on the luxury real estate market as a result of this cohort's size, concentration of personal wealth and transfer of wealth towards the home purchases of generation Y. Pressed by the demands of growing families, affluent generation X real estate buyers are propelling demand for detached single-family homes into a broadening cross-section of neighbourhoods. The survey also reveals the emerging influence of generation Y, who are redefining top-tier homes and neighbourhood standards with changing values and a new set of lifestyle and housing preferences.

The report includes insights into specific generational preferences regarding top-tier neighbourhoods, desired luxury home types and features, typical price ranges, and minimum square footages, while revealing buyer demographic insights, including common family, income and professional profiles.

According to Ross McCredie, President and CEO of Sotheby's International Realty Canada, "The luxury real estate market is not only shaped by economic forces, it's driven by generational values and demographics. Insights into preferences across generations allows us to understand housing trends and to anticipate their future impact on the market."

National Generational Highlights:

Baby Boomers (1946-1965)- Luxury Real Estate Traditionalists

According to the most recent Canadian census, 9.6 million people, or close to 30% of Canadians are baby boomers. Key luxury real estate trends for this generation include:

  • Luxury real estate traditionalism. According to survey insights, the baby boomer cohort has the most traditional standards for luxury properties and neighbourhoods. They are most likely to purchase homes in longstanding prestigious communities and to seek out neighbours of similar socio-demographic backgrounds. This cohort is also more likely to favour condominium residences affiliated with international luxury brands.
  • Upsizing and "rightsizing" Across all four major markets, affluent baby boomers with children and/or elderly parents living at home are likely to upsize by purchasing a luxury detached single family home at a minimum size of 3,000 square feet (above grade). At a stage at which lifestyle simplification becomes a priority, the trend is for this cohort to "rightsize" into large living spaces on fewer levels, rather than to downsize into significantly smaller properties. Luxury condominiums are the favoured property type for this segment in most major cities, with minimum square footages starting from 1,700 square feet in Vancouver, 2,200 square feet in Toronto and 2,500 square feet in Montreal. Calgary rightsizers are more likely to opt for luxury townhomes, bungalows or infills with a minimum 2,500 square feet.
  • Urbanism. The percentage of luxury homebuyers of the baby boom generation purchasing within 5 km of the downtown core is over 85% in Vancouver and 80% in Montreal, according to survey insights. Over 90% purchase within 10 km of Toronto's downtown core. This trend is less prominent in Calgary due to the location of many of the city's most prestigious neighbourhoods in suburban areas.
  • Community driven. Although a neighbourhood's prestige and exclusivity are the key attributes defining a top-tier neighbourhood for this generation, walkability and community/social connection are also ranked as high priorities.
  • Influence. As the most asset-rich of the generations surveyed, baby boomers have the most influence on Canada's luxury housing market. The typical price range of luxury property purchased is $2-5 million in Vancouver, $1-4 million in Calgary, $2-4 million in Toronto and $1.5-2 million in Montreal, the highest ranges of the generations examined. Furthermore, this cohort is highly likely to own multiple real estate assets and to be the source of financial support for generation Y homebuyers. With the majority of this cohort earning a combined household income of $300,000- $500,000 and often above, those who carry mortgages do so as a deliberate investment strategy rather than out of necessity.

Generation X (1965-1979) - Family-Driven Aspirational Buyers

Currently at ages 36 to 50, generation X is at the prime life stage for marriage, family and home ownership. Key trends in luxury home buying for this cohort include:

  • Family-driven priorities. The proximity to a desirable school is the most important home attribute for generation X, followed by space for growing families. As a result, detached single family homes at a minimum of 2,500 square feet above grade in Vancouver and Calgary, 2,000-3,000 square feet in Toronto, and 3,500-4,500 square feet in Montreal are the most common property types purchased by this cohort.
  • Aspirational purchasing. For this group, luxury property purchases are often reflective of newly achieved levels of professional success and financial standing. The typical price of a luxury home purchased ranges from $2-4 million in Vancouver, $1-2 million in Calgary, $1.5-2.5 million in Toronto, and $1-1.5 million in Montreal, according to survey insights.
  • Engaged and accessible communities. In contrast to baby boomers, this generation is redefining the boundaries of luxury neighbourhoods by purchasing luxury properties in socio-economically heterogeneous areas that offer diversity and community engagement. While escalating housing costs are one contributing factor to the emergence of new top-tier neighbourhoods, survey insights reveal that changing generational values are another key driver.
  • Financial self-sufficiency. Survey insights indicate that unlike generation Y, only a small minority of generation X receives family gifts or assistance on their initial downpayment, relying on mortgages and above-average dual incomes commonly ranging from $250,000 - $500,000 in both Vancouver and Toronto, $100,000 - $500,000 in Calgary, and $100,000 - $300,000 in Montreal to achieve a desirable home.

Generations Y (1980-2000) - Luxury Real Estate Trailblazers

Generation Y has only recently emerged as a Canadian home buying segment but is already actively redefining the luxury real estate market. Key trends include the emergence of:

  • First-time luxury condo buyers. The predominant preference among this segment of first-time luxury homebuyers is for presale or new condominiums with a minimum 800 square feet in Vancouver, 900 square feet in Toronto, and 850 square feet in Montreal. In Calgary, this generation has a unique preference for townhomes and infills of a minimum 2,000 square feet.
  • Influential spenders. The entry price points of generation Y luxury homebuyers typically range from $800,000- $1 million in Vancouver, $800,000- $1.5 million in Calgary, $800,000- $2 million in Toronto, and $400,000 - $1.5 million in Montreal. These entry prices are nearly double that of average Canadian first-time homebuyers.
  • Neighbourhoods as living rooms. Generation Y is willing to sacrifice space in favour of a trendy and urban location, treating neighbourhoods, as a direct extension of their personal living space.
  • Urban, diverse and eclectic top-tier neighbourhoods. Changing generational values are redefining top-tier neighbourhoods as urban, eclectic, emerging areas with socio-economic, ethnic and linguistic diversity. The percentage of generation Y luxury homebuyers purchasing within 5 km of the downtown core is over 90% in Vancouver, 70% in Calgary and 95% in Montreal, according to survey insights. Over 85% purchase within 10 km of Toronto's downtown core.
  • Eco-consciousness. Particularly in Vancouver and Toronto, generation Y prefers homes and neighbourhoods with bike paths, pedestrian walkways and easy access to public transit.
  • Instant luxury. As highly informed and sophisticated real estate consumers, generation Y requires new, quality homes with luxury features built in.
  • Financially assisted. Despite above average incomes most often ranging from $100,000 - $200,000 in Vancouver, $50,000 - $100,000 in Calgary, $80,000 - $250,000 in Toronto, and $100,000 - $200,000 in Montreal, over 85-95% of luxury buyers are reliant on mortgages. The vast majority also receive outside financial assistance towards down payments, primarily from baby boomer parents.

For more information and details on Sotheby's International Realty Canada and the Top-Tier Trends Report visit http://www.sothebysrealty.ca.

About Sotheby's International Realty Canada

Combining the world's most prestigious real estate brand with local market knowledge and specialized marketing expertise, Sotheby's International Realty Canada is the leading real estate sales and marketing company for the country's most exceptional properties. With offices in over 30 residential and resort markets nationwide, our professional associates provide the highest caliber of real estate service, unrivaled local and international marketing solutions and a global affiliate sales network of over 725 offices in more than 49 countries to manage the real estate portfolios of discerning clients from around the world. www.sothebysrealty.ca

Disclaimer

The information contained in this report references insights gained from in-depth, qualitative research conducted within the Sotheby's International Realty Canada network in Vancouver, Calgary, Toronto and Montreal. Sotheby's International Realty Canada cautions that while qualitative survey feedback can be useful in establishing trends, it is not intended to represent as or replace quantitative data and statistics from official statistical sources. Although high standards have been used in the preparation of the information and analysis presented in this report, the accuracy and completeness of the information is not guaranteed. No responsibility or liability whatsoever can be accepted by Sotheby's International Realty Canada, Sotheby's International Realty Affiliates or research contributors for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. This report is published for general information only and not to be relied upon in any way.

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