While there's no shortage of affordability challenges, Canada’s Gen Z haven’t relinquished their intentions to become homeowners, according to a new survey from Sotheby’s International Realty Canada and Mustel Group.
Gen Z is all too aware of pressing affordability challenges in major Canadian cities, notably Toronto and Vancouver, while ‘Zoomers,’ as they’re also known, in Montreal and Calgary are reportedly more optimistic about entering the housing market. The survey results showed that 75% of urban Canadian Zoomers intend to own a primary residence in their lifetimes, with 11% already having done so. Moreover, while 82% of respondents expressed trepidation about being priced out of their desired neighbourhoods, 70% want to purchase a single-family home during their peak-income earning years. Perhaps unsurprisingly, saving enough money for a down payment in light of other living expenses remains the overarching concern of more than a quarter of Gen Z respondents.
However, 50% of respondents have given up on the dream of single-family homeownership, signifying that what were mere affordability woes have gradually metastasized and become insurmountable -- 34% of this cohort cited price as the reason. But Don Kottick, President and CEO Sotheby’s International Realty Canada, cautions that perspective is needed.
“According to the survey, 50% had given up on the dream of owning a single-family home, but one of the things we have to realize is this demographic is just coming into the workforce and starting to accumulate assets, and the interesting thing is 11% have already bought a home, so over time people’s earning potential will increase,” Kottick told STOREYS, adding that Gen Z is on the cusp of receiving a massive generational wealth transfer he estimates will collectively top $1 trillion.
“So, economically, their buying potential will only improve over time, and they have already anchored themselves with the thought of wanting to own a single-family home.”
The survey covered Toronto, Montreal, Vancouver, and Calgary, and its results reflect the realities of those cities.
Housing affordability is deteriorating in Canada’s largest city but 73% of Gen Z reported aspirations to own a primary residence, while 46% are “ very likely” to, 28% are “somewhat likely” to, and 11% already do. But 84% of respondents who haven’t bought a home are worried they won’t be able to in their communities of choice as a consequence of surging price points, with fewer than half of this group “very worried,” according to the survey.
More than the other metropolitan areas surveyed, Toronto received the largest share of Gen Z respondents who cited current living expenses as the biggest hurdle to saving enough money for a down payment on a home. Additionally, 18% and 14% of respondents reported student loan payments and non-essential outlays, respectively, as barriers. Owning a single-family home was also more pronounced among survey respondents in Toronto than the other cities surveyed, with 72% declaring they would like to own one during their peak earning years, while 13% and 11% respectively preferred an attached home and a condo, and 3% stating that they want to own a duplex or triplex unit.
But 52% respondents in the GTA have forgone aspirations to own a detached home, the average price of which Sotheby’s reported is $1,540,432. Still, 38% of the city’s Gen Z respondents believe their first home will be a single-family dwelling.
The city’s economy is more buoyant than it has been in decades and that was reflected in the survey results, as 79% of surveyed Gen Z adults in Montreal expressed confidence that they were like to purchase a primary residence in their lifetime -- 57% of this cohort believe they are “very likely” to, in fact, and 8% already do. But that doesn’t mean they don’t anticipate headwinds in the years ahead: 80% of Gen Z adults who hadn’t bought a home are concerned they will be priced out of their desired communities. Among respondents concerned about saving down payments, current living expenses, non-essential outlays, and student loan payments were cited by 27%, 15% and 13%, respectively. Still, demand for single-family homeownership is highest among this group, the survey report noted, with 64% believing they will purchase one during peak earning years if there aren’t budgetary constraints. Thirteen percent expressed desire to live in an attached home, while a further 13% want a condo, and 10% a duplex or triplex.
However, 48% of Montreal’s surveyed Generation Z adults have given up on the dream of singe-family homeownership, with 29% citing the high cost of entry -- Sotheby’s has the average price of a single-family Montreal home at $515,000, the lowest of all metropolitan areas surveyed. A quarter of respondents said their most likely first home purchase would be a condo, while 12% believe it will be an attached home or townhouse, and 10% stated it would be a duplex/triplex.
Montreal is poised for growth in the years ahead, Sotheby’s says, because of the city’s relatively affordable housing prices and vibrant urban life, as well as its respected post-secondary institutions, which already attract students and young professionals from within and without Canada’s borders, and which play outsized roles in retention of locals.
Unsurprisingly, respondents expressed a lot of anxiety about purchasing a home in Canada’s most expensive real estate market. But that anxiety was somewhat tapered by the belief that they will successfully attain homeownership.
Seventy-one percent of Gen Z respondents in Vancouver believe they are very likely to purchase a primary residence, although fewer than half believe they are “very likely” to. But Vancouver had the highest share of Gen Z respondents who already own a home at 15%. Still, 82% of respondents believe they will be priced out of their desired communities and 33%, which is also the highest share of among Gen Z respondents in Canada’s major markets, said their current living expenses are preventing them from saving for a down payment. Additionally, 14% and 12% reported non-essential lifestyle expenses and student loan payments, respectively, as obstacles to saving for down payments.
Nevertheless, 68% of Vancouver-based Gen Z respondents would purchase a single-family home during their peak earning years if unconstrained by budget, while 15% would buy an attached home, 10% would purchase a condo, and 7% a duplex or triplex. According to Sotheby’s, the average price of a single-family home in Metro Vancouver is $1,850,500, which is the reason, of the 56% of respondents who don’t intend to buy one, 36% cited.
A third of respondents believe they can realistically obtain a single-family home as their first purchase, while 30% thought a condo was more plausible, followed by 22% who think an attached home or townhouse is in the cards, and 6% citing a duplex or triplex.
Before the COVID-19 pandemic, Calgary had been mired in a years-long economic slump triggered by the oil and gas sector’s nadir. But the pandemic, perhaps counterintuitively, breathed new life into housing markets across Canada, and Calgary was no exception. The city’s Gen Z population is well positioned to enter the housing market, as indicated by the optimistic survey results. In fact, the survey report even expressed confidence that Calgary would attract young first-time homebuyers from the country’s other major cities because favourable prices, including in the single-family detached segment of the market.
The report revealed that 78% of respondents were confident that they could afford a primary residence, with 53% stating they’re “very likely” to. Moreover, 12% of Gen Z respondents already own their primary residence, but 82% of those who hadn’t yet bought a home expressed concern about being priced out of their desired community, bespeaking creeping disquiet about housing affordability in the city. Still, only 32% of this cohort are “very worried” they will be priced out of where they want to live, which is the lowest share of major markets in the survey.
Current living expenses, student loans and personal education were cited by 28%, 17% and 15%, respectively, as hurdles to saving for a down payment, however, the desire to own a single-family home during their peak earning years was, at 82%, higher in Calgary than the other cities surveyed. Ten percent of Calgary’s Gen Z respondents reported a preference for owning a an attached home, while 7% want condo and 2% a duplex/triplex.
Only 39% of the city’s Zoomer respondents had abandoned their dream of owning a single-family home, of whom 28% cited cost as the reason. In any case, Calgary’s Zoomers were, at 50%, more likely than respondents in the other cities to express confidence that their first purchase would be a single-family home; this was followed by 21%, 11% and 7% respectively believing they would purchase an attached home, condo or duplex/triplex.