Luxury Homes for Different Generations
By Sam R on Apr 14, 2015
A recent report on the luxury property market is shedding light not only on the buying trends of three successive generations, but also on what the future of luxury homes might look like as a result of today’s buying decisions.
The Top-Tier Generational Trends Report: A Comparative Survey of Top-Tier Real Estate Trends Across Generations in Canada looks at buying trends of Baby Boomers and generations X and Y — the key earners in today’s society — in the high-end real estate markets of Vancouver, Calgary, Toronto and Montreal. The data was gathered by Sotheby’s International Realty Canada from a survey of its associated agents and market leaders. Sotheby’s is the leading real estate sales and marketing company for the country’s most exceptional properties.
“The luxury real estate market is not only shaped by economic forces, it’s driven by generational values and demographics,” states Ross McCredie, president and CEO of Sotheby’s International Realty Canada. “Insights into preferences across generations allows us to understand housing trends and to anticipate their future impact on the market.”
The survey revealed Baby Boomers yield the most influence in today’s market based on sheer size alone — Boomers account for nearly a third of Canada’s population — but also because of the generation’s personal wealth and the transfer of wealth to their successors (Generation Y). Generation Y, in turn, is starting to change the standards of luxury homes due to their lifestyle and housing preferences.
Baby Boomers (defined as the 9.6 million Canadians born between 1946 and 1965) are classified as Luxury Real Estate Traditionalists, who tend to purchase homes in long-standing, prestigious communities where their neighbours have similar socio-economic backgrounds. They may be waiting for the last of their children to leave the nest or bringing elderly parents into their homes, and, as such, they want to reduce the levels in their residences. The current trend is toward luxury condos relatively close to the downtown cores of major cities (within 5 km in Vancouver and Montreal; 10 km in Toronto), with the exception being the suburban bungalow and townhome buyers in the Calgary market. With households earning between $300,000 and $500,000, on average, they tend to spend in the highest home price ranges and carry mortgages as deliberate investment strategies rather than out of necessity.
Generation Y luxury buyers are favouring high-end condos in the 800 to 900 square foot range. This is a penthouse model suite at 5959 Yonge Condos by Ghods Builders.
Generation X (born between 1965 and 1979) are family driven, choosing their homes close to desirable schools and with the space to accommodate family growth. Home sizes range from 2,500 to 4,500 square feet. The purchases usually reflect their professional success and financial standing, ranging from $2-4 million in Vancouver, $1.5-2.5 million in Toronto, $1-2 million in Calgary, and $1-1.5 in Montreal. Unlike Boomers, Generation X tends to choose neighbourhoods that offer diversity and community engagement. They carry mortgages out of necessity, relying on above-average dual incomes that range from $250,000 - $500,000, depending on the city.
Generation Y (1980-2000) are Luxury Real Estate Trailblazers with a preference toward new (or even presale) luxury condominiums in the 800 to 900 square foot range (except in Calgary, where townhomes of 2,000 square feet seem to be the preference), and seem willing to spend in the $800,000 - $2 million range (nearly double that of the average Canadian first-time buyer).
They seem to prefer sacrificing their personal entertainment space for community entertainment, favouring trendy, urban locations with diverse socio-economic, ethnic and linguistic characteristics, in which they can meet up with friends. They also have an environmental consciousness that draws them toward neighbourhoods with bike paths and pedestrian walkways, and with easy access to public transit. Their choices tend to be within 5 km of the downtown cores of Vancouver, Calgary and Montreal, and within 10 km of downtown Toronto, and despite above average personal incomes (ranging from $100,000 - $250,000, annually), they depend on their Baby Boomer parents for help with down payments and are reliant on mortgages.
Baby Boomers are refinancing the luxury homes in which they have brought up their families or “rightsizing” into other luxury homes, and using the proceeds to help out their Gen-Y children with their first purchases, which are not the same kind of single detached suburban structures, but rather high-end condominiums in trendy downtown neighbourhoods, close to their work.
Meanwhile, Generation Xers are spreading out their luxury homes across a broader array of neighbourhoods, in contrast to the top-tier communities in which Boomers concentrated their purchases.
It doesn’t sound like the bubble will burst anytime soon.
Feature image: Sky Life suite at Tridel's Islington Terrace
