Good morning,
Dropping home prices and economic uncertainty hasn’t turned Canadians off the housing market, with people across all age groups bullish on real estate, new research suggests.
Members of the baby boomer, generation X, millennial and generation Z cohorts are confident owning a home is a good financial investment, and 49 per cent think a home purchase will produce a similar or better return than other investments over the next 12 months, according to a generational trends report released March 15 from Mustel Group and Sotheby’s International Realty Canada. People are even more bullish about real estate’s performance in the long term, the survey said, and 60 per cent think property will match or exceed other financial investments in the next 10 years.
As a result, Canadians of all ages are eager to get into the housing market, and the survey suggests the pandemic may have helped accelerate homeownership dreams. Across all generations, 35 per cent say they are more likely to buy a house than they were in January 2020. Homeowners are also more eager to sell. One-third say they are more likely to put their house on the market within the next five years than they were before the pandemic started.
Those findings come amid a housing market that has cooled significantly from its peak as elevated inflation and resulting higher interest rates weighed on prices. The average price of a home fell 12 per cent in 2022, and is expected to fall another six per cent this year, according to the Canadian Real Estate Association. The economy is also softening, and many economists predict the country will tip into a recession sometime this year. To add to that, a rising cost of living is boosting every-day expenses, and many people are taking on more debt to help make ends meet. Higher interest rates have also made the prospect of paying down a mortgage much more expensive, putting homeownership out of reach for many.
Still, that’s not enough to put people off wanting to buy real estate, Sotheby’s Canada said.
“Confidence in our real estate market remains high,” Don Kottick, chief executive of Sotheby’s Canada said in a press release, adding, “Demand for housing and housing mobility across every generation is more pressing than ever.”
The pandemic played a key role in stoking the desire to own a home. While lockdowns during the pandemic initially pushed people to seek out more space, fuelling sales and prices, the pandemic also highlighted the value of including property in a financial plan. Stock market volatility during the pandemic made real estate an attractive alternative to traditional investments, Sotheby’s Canada said.
“One of the most transformative and enduring social and economic outcomes of the pandemic is that Canadians now place a heightened importance on primary home ownership,” Kottick said, “not only as an investment in their lifestyle and personal security, but as an investment in their financial future.”
Baby boomers are the most bullish on owning property, the survey found, and 28 per cent think real estate will outperform other investments within the next 12 months. Forty-four per cent also think homeownership will bring higher returns than other investments over the next decade. In comparison, 34 per cent of gen X-ers, 32 per cent of millennials and 30 per cent of gen Z-ers expect the same in the long term.
And while a third of Canadians say they’re more likely to buy a house in the next five years than they were pre-pandemic, intentions differ among generations. Baby boomers say they’re 29 per cent more likely to buy a house, but 23 per cent say they’re less likely. Among gen X, 35 per cent are more likely to make a home purchase, with 23 per cent less likely. Millennials are a bit more eager to get in on homeownership, and 36 per cent say they’re now more likely to buy a house. Similarly, gen Z-ers say they’re 40 per cent more likely to become homeowners.
However, some members of the younger generations are also more turned off homeownership, the survey said. A “notable” 31 per cent of millennials and 33 per cent of gen Z-ers say they’re less likely to buy a house than they were pre-pandemic, much higher than baby boomers and generation X-ers.
Mustel Group and Sotheby’s Canada polled 2,000 people aged 18-77 living in Vancouver, Calgary, Toronto and Montreal.
