SOTHEBY’S PRESIDENT ON GROWING CONFIDENCE AMONG GEN Z ABOUT OWNING A HOME DESPITE AFFORDABILITY CONCERNS

by | Dec 16, 2021 | Real Estate

It seems incredible, when you look at rising home prices in major urban centres across Canada. Many studies predict that those prices will jump again in 2022 – 10% in Toronto, based on a recent RE/MAX study. The average price in Toronto in 2021 was $1,054,922, according to RE/MAX. This doesn’t seem to be fazing Gen Z (anyone born from 1997 onward), according a study just released by Sotheby’s International Realty Canada and Mustel Group.

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According to the survey, 75 per cent of urban Canadian Generation Z will likely buy or own a primary residence in their lifetime. Forty-nine-per-cent said they were “very likely” to do so. One in ten (11 per cent) already own a home. However 82 per cent did say they were concerned they wouldn’t be able to buy a home in their community of choice because of rising prices. Seventy per cent would want to buy a single family home in their peak earning years if budget were not a consideration. The top financial barrier for Gen Z hen saving for a down payment is paying for current living expenses (cited by 28 per cent).

Gen Z: Owning a home remains the dream

Although 50% have already given up on their dream of owning a single family home, with 34% stating that they have given up due to the high cost. As a result, approximately half of those surveyed state that their most likely and realistic first home purchase will be a higher-density housing type: 25% report that their first home purchase will likely be a condominium, 18% say that their first home will be an attached home/townhouse and 7% state that their first home purchase will be a duplex/triplex. 39% report that they are most likely to buy a single family home as their first residence.

It’s a fascinating study because it’s a window into the thinking of the next generation of the real estate market in this country. Regarding Luxury spoke with Sotheby’s International Realty Canada president and CEO Don Kottick about the survey results.

Sotheby’s listing, 321 Pinnacle Ridge Place SW, Springbank, Alberta, Instagram @canada_sir

Based on the results that you see in this survey, and the realities of getting into the homeownership market in Canada now (tighter mortgage stress tests, inflation, inventory squeeze) is what the high number of Gen Zers are saying about owning a home, their confidence in that, even realistic?

In spite of the challenges of getting a foothold in Canada’s housing market, we absolutely believe that Generation Z’s confidence and aspirations for homeownership are realistic. We have to keep in mind that this is still a young demographic, and many are still building their careers and financial foundations.

This is also a generation that has likely not yet received forthcoming financial support from their families towards homeownership. In fact, I suspect that in a few years’ time, Gen Z’s confidence and desire to own a home will likely be even stronger than current levels.

What in particular surprised you about the survey results?

Given that we understand that affordability is top of mind for many young Canadians, the general optimism of Canada’s urban Gen Z population towards homeownership was quite surprising, and in particular, the fact that 75% say that they are likely to buy and own a primary residence. It was also surprising that over 1 in 10 already own their own home, indicating that housing has been top of mind for what is still a young cohort for quite some time.

Are you more or less confident now about the future strength of the Canadian real estate market after reading these survey results?

The results of the survey reinforce our confidence in the long-term strength of the Canadian real estate market and the general sentiment of what is poised to be Canada’s next generation of homebuyers. The demand is there as well as the awareness that real estate is a sound investment, specifically in our largest metropolitan areas.

It’s this, coupled with the strong work ethic of Canadian Gen Zs, their technical prowess and overall positive sentiment toward the market that has me looking forward to these savvy future homebuyers entering our market in droves and influencing our housing needs and market as a whole.

Sotheby’s listing, 132A Balmoral Avenue, Toronto, Instagram @canada_sir

What does their confidence tell you about the state of the Canadian real estate market, the stability of real estate investment in Canada, and how that’s perceived?

The past two years have reinforced for many Canadians, including Generation Z, the importance of home and having a safe place to live, work, and play. It is clear from our research that while rising housing affordability challenges are top-of-mind for Canada’s Generation Z home buyers, this new cohort of future buyers is determined to enter the market and considers real estate a sound and stable investment. 

75% of those surveyed are confident they will purchase a home in their lifetime, and 39% are confident their first home purchase will be a single family home. The future is bright for Canada’s Gen Z population.

Did luxury housing enter the discussion in the survey at all? Where does luxury fit in?

Our survey focused on the urban Generation Z population as a whole. However, based on what we have observed of young buyers to date, young luxury home buyers are unique in the sense that they often have some extent of generational wealth supporting their housing goals. Not surprisingly, this can often allay some of their anxiety about entering the housing marke.”

TOP IMAGE: Sotheby’s listing, 4 Ch. Crow Hill, Bolton-Ouest, Quebec, Instagram @canada_sir

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