Photo: James Bombales
Sotheby’s International Realty Canada’s new findings about luxury home buyers highlights the contrasts between what well-heeled purchasers are looking for in a home.
Going against the commonly held belief that aging Baby Boomers are going to have to squeeze into a smaller home as they age, the Sotheby’s report found affluent Boomers in major Canadian cities are quite often doing the opposite. Boomers were more likely to upsize into a bigger living space or “rightsize” by moving into a similarly-sized space with fewer stairs.
This demographic, born between 1946 and 1965, prefers condos tied to international luxury brands and have been dubbed by Sotheby’s as “traditionalists,” more likely to settle in neighbourhoods with long-standing prestige. In other words, they’re all about the labels, a clear contrast to the generations that followed.
Boomers in the luxury condo market typically buy suites starting from 1,700 square feet in Vancouver, 2,200 square feet in Toronto and 2,500 square feet in Montreal. In Calgary, where many of the prestigious neighbourhoods are out in the low-rise suburbs, rightsizers typically go for luxury townhouses, bungalows and infill properties starting at 2,500 square feet.
For those living with elderly parents or children, luxury-buying Boomers tend to upsize to a detached single family home that spans a minimum of 3,000 square feet (above grade).
Boomers are the heaviest hitters in the country’s luxury market, and more than 75 per cent of those who buy luxury properties own multiple homes and tend give their kids in Generation Y a boost with their home purchases. Typical purchase prices differ between cities: in Vancouver, Boomers buying luxury homes typically buy within the $2 million to $5 million range, Calgary buyers spend between $1 million and $4 million, Toronto buyers go between the $1.5 million and $2 million range and Montrealers stay within $1.5 million and $2 million. Naturally, these price ranges are higher than the amounts spent by luxury home buyers in Generation X and Y.
Interestingly, wealthy Generation Y buyers, born between 1980 and 2000, are much more focused on location than square footage. Instead of gravitating towards the high-prestige addresses favoured by their parents, Sotheby’s found them more likely to settle in “emerging areas with socio-economic, ethnic and linguistic diversity.” Even though they could arguably get much bigger homes outside the city, wealthy Millennial home buyers are typically settling in urban condos. In Vancouver, they tend to be a minimum of 800 square feet in size, while in Toronto and Montreal they are 900 and 850 square feet, respectively. Calgary once again bucks the trend with Millennial luxury buyers opting for townhomes and infills of a minimum 2,000 square feet.
“Generation Y is willing to sacrifice space in favour of a trendy and urban location, treating neighbourhoods, as a direct extension of their personal living space,” said Sotheby’s, in its report.
Entry into the luxury market for the demographic starts at $800,000 in each of the cities, save Montreal, where it begins at $400,000.
These buyers are also getting help from the bank of mom and dad. Sotheby’s said the “vast majority” get financial help for down payments, primarily from their Baby Boomer parents. It’s a stark contrast to luxury home buyers within Generation X where “only a small minority of Generation X receives family gifts or assistance on their initial downpayment.”
The top priority of Generation X is the home’s proximity to a desirable school, which makes sense given the generation, aged 36 to 50, is in their prime child-rearing years. These “aspirational” buyers are also purchasing detached single family homes at a minimum of 2,500 square feet above grade in Vancouver and Calgary, within the range of 2,000 to 3,000 square feet in Toronto, and 3,500 to 4,500 square feet in Montreal.
Although they may be purchasing different luxury property types than Millennials, Generation X have also upended the traditions of Baby Boomers by drifting away from typical prestige neighbourhoods.
“Generation X luxury homebuyers will contribute to the high demand for single family homes in the coming decade, but they will also be the most significantly impacted by escalating prices. As a result, it is expected that this cohort will continue to shift the boundaries of top-tier neighbourhoods, driving new demand for emerging areas,” said Sotheby’s Canada.