Gen Z's Game Plan for Canadian Real Estate Ownership
As you navigate the continually shifting terrain of the Canadian real estate market, there’s a new force to reckon with: Generation Z. Born into a digital world, this savvy group is now stepping into the arena of home ownership with bold aspirations and a clear vision for their financial future.With the stakes high in cities like Vancouver, Calgary, Toronto, and Montreal, Gen Z’s approach to buying their first home is reshaping the market. They’re not just dreaming of keys in hand; they’re strategizing, saving, and making sacrifices to turn those dreams into reality.Generation Z and Real Estate Trends in Home Ownership in CanadaFinancial Strategies for Home BuyingSavings and Sacrifices: Young Canadians are actively strategizing their path to home ownership. High confidence levels in the housing market prompt them to save diligently and make necessary sacrifices.Long-term Investment: Viewing home ownership as a secure, long-term investment, Gen Z is not just searching for a place to live, but also a wise financial decision that can benefit them in the years to come.Housing Mobility Aspirations: Despite the economic challenges posed by the pandemic, Gen Z’s aspirations remain strong, with many planning to enter the housing market within the next five years.City Specific TrendsThe preferences of this cohort are reflected in the trends across various Canadian cities:Vancouver & Toronto: With high real estate values, these cities attract young homeowners who see the potential for property appreciation over time.Calgary & Montreal: More affordable markets in these cities allow for a relatively easier entry point for Gen Z homebuyers seeking value for money.The Impact of Generation Z on the Real Estate MarketBuying Trends among Generation Z Homeowners in CanadaFinancial Strategies and Homeownership AspirationsGeneration Z’s entrance into real estate is marked by their unique strategies to cope with economic challenges. Their approach is multifaceted:StrategyPercentage of Gen ZSecuring a full-time job with higher pay51%Reducing or eliminating personal spending42% Additionally, many are drawn to less conventional pathways such as co-ownership, with 27% in Vancouver open to purchasing with family, and another 13% considering co-ownership with friends. Despite market pressures, this generation’s persistence is undeniable as they adapt to achieve their homeownership goals.Housing as a Financial KeystoneGeneration Z views the real estate market through a lens of long-term investment. A substantial 86% of young adults in Vancouver see home ownership as a linchpin for financial stability in retirement. They regard property investment on par, if not superior, to traditional financial instruments.Renting Trends among Generation Z in CanadaWhile homeownership is the ultimate aim, renting remains a reality for many within Generation Z. They often leverage rental arrangements as a step towards amassing savings for future property purchases.Adapting to Affordability ConcernsA significant portion of Gen Z is opting to live with roommates or friends to reduce living expenses, a choice made by 26%. Similar cutbacks extend to other facets of personal spending like entertainment and vacations, also at 26%, signifying a collective shift towards frugality in anticipation of future real estate investments.Factors Influencing Generation Z’s Home Ownership Decisions in CanadaAffordability of Real Estate in Canada for Generation ZThe pursuit of homeownership in Canada is significantly influenced by affordability. With the average home price in major metros reaching new heights, Gen Z is finding traditional pathways to ownership more challenging. 41% of Generation Z homebuyers aim for full ownership of their first home. However, the financial realities mean that 24% of urban Gen Z adults are considering co-ownership with family, and 13% with friends or non-family members, particularly in high-cost cities like Toronto and Vancouver.High confidence in the property market prevails, though, with a remarkable 83% of urban Canadian Gen Z adults seeing homeownership as a gateway to financial stability in retirement.Accessibility to Mortgage and Financing Options for Generation Z in CanadaAccessibility to mortgage and financing options can make or break home-buying aspirations. Gen Z is actively looking for competitive mortgage rates and flexible financing solutions. In their eyes, homes are not only living spaces but also long-term investments. They tend to prioritize mortgage plans that dovetail with their broader financial strategies, which is why 71% believe a home purchase is likely to perform on par with, or even outdo financial investments like RRSPs and TFSAs.Changing Preferences and Priorities of Generation Z in Home OwnershipGen Z’s preferences and priorities are reshaping the real estate market.No longer are they solely interested in size or location; instead, sustainable living and technology integration have become key factors in the decision-making process. They’re willing to explore different neighbourhoods and housing types, reflecting adaptability and a focus on life beyond the four walls of a home. As they juggle financial constraints and personal aspirations, their pragmatic approach could steer future market trends in novel directions.Challenges Faced by Generation Z Homeowners in CanadaLack of Financial Stability among Generation Z HomeownersThe foundation of any successful bid for homeownership is financial stability. Yet for Generation Z, this can be particularly elusive. Many are in the nascent stages of their careers, possibly navigating the transition from education to full-time employment. This demographic’s median income remains understandably lower compared to more established generations, which can make accruing sufficient savings for a down payment a daunting endeavour.Saving for a down payment is a critical step, and it’s one that 33% of Gen Z adults are planning to take within the next five years. However, with a competitive job market and potentially lower starting salaries, the timeline to reach this financial milestone may stretch longer than anticipated. Coupled with rising living costs, achieving financial stability is a significant hurdle for Gen Z potential homeowners.Competition in the Real Estate Market for Generation ZAnother stark reality for hopeful members of Generation Z in the housing market is stiff competition. Not only are they competing against their peers but also against more financially robust generations, including Millennials and Generation X, currently at the peak of their earning potential. These groups are often looking to purchase or upgrade homes, commanding greater purchasing power and, hence, an upper hand in bidding wars.Even with a positive outlook on long-term real estate investment among Canadians—including 60% of participants predicting property to match or outperform other financial investments in the next decade—they’ll still have to navigate a market that’s increasingly becoming saturated with buyers from multiple generational cohorts.In major cities like Toronto and Vancouver, the scarcity of affordable housing options further intensifies the competition. These urban areas may represent employment hubs, attracting young professionals, but also the most challenging markets in which to secure that first home purchase.ConclusionGeneration Z is not deterred by the hurdles that come with property ownership. Instead, they’re embracing the challenge with a mix of optimism and strategic planning. Their goals extend beyond the immediate benefit of having a place to call home. For them, it’s about laying a solid foundation for their financial independence. Keep an eye on this generation; they’re reshaping the future of homeownership in Canada with their resilience and forward-thinking.
Early start to 2024 home buying season sees surge in activity yet limited supply across Canada
The 2024 buying season kicked off early this year, as hopeful homeowners all across Canada looked to take advantage of an opportunistic environment for the first time since the early pandemic.With Bank of Canada interest rates holding for the fourth consecutive time, and the anticipation of a cut to come in the months ahead, viewings, purchases and even some bidding wars are on the rise. Many prospective buyers seemed to have predicted the rate hold, getting in early on the chance to finally acquire a home. Someone “flips a switch” each year “I don’t know how else to describe it, but every year it seems someone flips a switch,” says Lindsie Tomlinson, a Re/Max Select Realty agent in Vancouver. “We go from the slowness of the winter holiday season and then someone flips a switch, and it gets really active and busy. It usually happens later in January and into February or March.”She says that this year, it happened “really early in January, even before the interest rate announcement.”Tomlinson anticipates a busy spring season, particularly compared to last year, with Vancouver and the surrounding suburbs already seeing a lot of interest. She says she still has clients who have been waiting for months for the right opportunity.She was one of several agents across Canada who spoke to REM about the current state of the market. They all noted that despite optimism for a busy season, one problem remains all over the country. The consistent problem across Canada: Supply “There’s limited inventory,” says Simon Hunt of Simon Hunt Realty in Calgary. “The market is going to be pretty tight.” He reminds us that inventory was limited in 2023, but sales were down; he also anticipates a busy season with sales already brisk and some bidding wars popping up.There is a similar sentiment elsewhere in Alberta where Samantha Sajjad, an associate at MaxWell Devonshire Edmonton, is seeing plenty of bids and not a lot of options. “Our market seems to be doing extremely well along with Calgary,” she says. “Buyer confidence is high. We have lots of out-of-province buyers coming into Edmonton, either those who have been here for a bit and have been renting or those who are virtual.”Potential buyers looking to get a deal moving to the Prairies or Atlantic Canada have likely missed the opportunity available during the pandemic.The same trends are taking place in Nova Scotia, where agent Brenda K Kielbratowski of Keller Williams saw a busier month of January than the same time in 2023, with buyers and sellers attuned to the new normal. “We’ve acclimated to it now,” she says of the past interest hikes. Now that the Bank of Canada has been holding rates, “buyers are back out there looking.”While she notes the days of the wild bidding wars are over, there simply aren’t a ton of options. “I don’t see the supply and demand balancing out. People aren’t selling their homes. It’s an inventory problem.” Most sales at or just above list price The consensus across the country is most sales end up at or just above list price. While bidding wars do exist, the number of parties involved isn’t as large as it had been, and the padded offers aren’t as outrageous.In Ottawa, Chelsea Hamre has been busy. She saw people start buying as early as January 1, with clients prepared for an interest rate hold and ready to jump. “The market has been really good for us, as a team, as a whole, with a great amount of sales,” she says of the Hamre Real Estate Team. “Buyers are out buying, sellers are considering, but there is still an inventory crisis.” More activity in the GTA, interest rate drop may not impact much The GTA sees all the same opportunities and drawbacks as the rest of the country, with increased activity but limited inventory.“After the interest rate announcement, the market started to heat up a bit, and with the possibility of the Bank of Canada reducing the rate in March or April, I think (it) sparked buyers to get in,” says Re/Max agent Anuja Kumarasamy. “There are more showings and offerings but in terms of prices, I haven’t seen a real increase. They are still according to market value.”Kumarasamy, who is mostly in Durham and Scarborough, sees more people getting in once the interest rates officially decrease but does wonder if the announcement is more psychological than practical. “Some people are waiting for the announcement because they’re not confident enough yet,” she says. “Even if they drop it, it’ll be like 0.25 per cent. It isn’t really going to impact how much more you can qualify for.“Other agents wondered that while interest rates may decline this year, this could result in list prices ticking up slightly. Enjoying this article?Get the latest REM articles in your inbox 3x week so you stay up to date on the latest in the Canadian real estate industry Success! Email Subscribe The post Early start to 2024 home buying season sees surge in activity yet limited supply across Canada first appeared on REM.The post Early start to 2024 home buying season sees surge in activity yet limited supply across Canada appeared first on REM.
TRREB forecasts 2024 as start of multi-year housing recovery in GTA
The Toronto Regional Real Estate Board (TRREB) released its projections for the Greater Toronto Area (GTA) real estate market in the 2024 Market Outlook and Year in Review report and interactive digital digest.The report covers various aspects of the GTA real estate market, including emerging trends in new homes and condos, along with an assessment of the commercial sector.It incorporates Ipsos consumer polling data, revealing insights into 2024 home buying and selling intentions, alongside TRREB’s analysis of home sales, new listings, average prices and market drivers like interest rates, population growth and employment. 2024: The start of a “multi-year recovery” TRREB’s chief market analyst, Jason Mercer, weighs in: “Demand for ownership housing in the GTA will start improving in 2024. Record population growth, a resilient economy, low unemployment and declining mortgage rates in the second half of the year will result in increased home sales compared to 2023.This will be the start of a multi-year recovery as some households will still face affordability challenges, even as borrowing costs begin trending lower. As the demand for housing picks up, it will be equally important to see a rebound in the supply of homes for sale and an uptick in new home construction.” Key market outlook highlights Projections indicate a total of 77,000 home sales for the year. The average selling price is forecasted to reach $1,170,000 across all home types, positioning as the second-highest recorded, yet remaining below the peak observed in early 2022.As well, Ipsos data suggests a consistent overall interest in home purchases compared to the previous year, with 28 per cent of respondents considering buying a home in 2024. However, the proportion of respondents expressing a high likelihood to purchase has slightly decreased, underscoring lingering uncertainty among potential buyers.The percentage of homeowners likely to list their properties for sale in 2024 decreased by 2 per cent compared to 2023, highlighting ongoing challenges in listing inventory availability amid rising demand.In addition, the report delves into the repercussions of the housing crisis on residents’ mental and physical well-being, emphasizing the urgent need for increased housing supply to accommodate the record population growth driven by immigration. Call to end “band-aid solutions that result in larger issues than the problems they attempt to solve” TRREB president Jennifer Pearce emphasized the necessity for proactive planning and streamlined processes to address housing affordability and supply issues effectively: “In the wake of a growing population, policymakers cannot lose sight of planning ahead, and avoid applying band-aid solutions that often result in larger issues than the problems they are attempting to solve.”Echoing Pearce’s sentiments, TRREB CEO John DiMichele stressed the urgency of accelerating housing supply and providing support for first-time homebuyers through measures such as relief on upfront land transfer taxes.“Prioritizing “missing middle” housing will provide more diverse and affordable housing options – something we have long called for. All levels of government need to work together and ensure the right incentives are in place for developers to build more housing across the spectrum,” says DiMichele. Read the full report here. Enjoying this article?Get the latest REM articles in your inbox 3x week so you stay up to date on the latest in the Canadian real estate industry Success! Email Subscribe The post TRREB forecasts 2024 as start of multi-year housing recovery in GTA first appeared on REM.The post TRREB forecasts 2024 as start of multi-year housing recovery in GTA appeared first on REM.
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