Canada is famous for remarkable cities with fascinating natural surroundings, providing inhabitants the best of both worlds. No wonder they enjoy great demand among home buyers. According to a recent study, Canada’s baby boomers are the new consumer power behind the surging luxury housing market in some of the cities. They are cash rich and ready with down payments so that their children get expensive homes. The study was conducted by the Sotheby's International Realty. It said middle-class boomers are helping out their children with down payments for homes of every price range.
Home sales worth over CA $1 million are booming in Canada's big cities. Homes in the Vancouver neighbourhood regularly sell for CA $3 to CA $4 million, reports CBC News. The study notes that a majority of young buyers of properties priced at over CA $800,000 had help from the mom and dad. “The luxury real estate market is not only shaped by economic forces, it's driven by generational values and demographics,” said Ross McCredie, President and CEO of Sotheby's International Realty Canada. Sotheby's based its report on interviews with realtors in various markets across Canada.
Canada has 9.6 million people born between 1946 and 1965, constituting 30 percent of the total population. They are in their 50s and 60s with annual incomes in the range of CA $300,000 to CA $500,000. According to mortgage insurer Genworth, which also did a homebuyer survey, one third of new owners are getting cash from their family. It said baby boomers are sitting on a large pile of collective wealth drawn from inheritances from their parents, especially in Vancouver, where homes have hugely appreciated in value over the past 25 years.
According to Sotheby study, the luxury home sales are driven by "right-sizing," which means boomers opting for larger homes with spacious rooms to accommodate adult children or elderly parents. Given that these elders can afford the price for traditional luxury neighbourhoods in Vancouver and Toronto, the trend is not very surprising.
Right-sizing implies, buying of an average 3,000-square-foot condominium or a bigger home in a better neighbourhood, with room for elderly relatives or adult children who may be living with them. The so called better neighbourhoods include luxury areas such as Forest Hill in Toronto, Shaughnessy in Vancouver.
In terms of prices, an average luxury property is worth $2-5 million in Vancouver, $1-4 million in Calgary, $2-4 million in Toronto and $1.5-2 million in Montreal. For generation X and Y, in the age group of 36 to 50, the priority is to have a home close to good schools and show off their new-found affluence. For, people in the age of 35 or less (generation Y) a preferred luxury home is a downtown condo in a trendy urban neighbourhood.
Meanwhile, Vancouver real estate is seeing the influx of big money from foreign buyers and other Canadian provinces. This is fuelling huge price increases and no abatement is in sight, according to the CEO of Sotheby’s Canada. The affluent buyers range from Albertans with their black gold to globetrotting wealth of some lucky heirs. “You’re not only competing with other wealthy Canadians but competing with wealthy people all over the world,” McCredie told Business in Vancouver.
It seems, Alberta is most attracted to Vancouver. Wealthy Albertans have properties in Vancouver’s Coal Harbour neighbourhood, as well as Vancouver Island and Kelowna where vacation homes are in high demand. International buyers are also in hot pursuit of the high-end real estate markets in Vancouver, Toronto and Montreal. Sotheby’s report says buyers from China dominate Vancouver, while Toronto is chased by China, Russia and the Middle East buyers. Similarly, Europeans (especially French) are ahead in Montreal followed by Middle East and Chinese buyers, who are very fond of Montreal property.