Earlier this year, The Mustel Group marketing firm and Sotheby’s International Realty Canada conducted a study called 2023 Canadian Real Estate Market Sentiment: Generational Trends Report.
The first extensive study on the confidence levels of 2,000 Canadians between the ages of 18 and 77 (Baby Boomers, Generation X, Millennials and Generation Z) in the Vancouver, Calgary, Toronto and Montreal Census Metropolitan Areas, it reported high levels confidence across the generations.
These results were a pleasant surprise for me.
After decades working in the new home real estate industry, I have seen first-hand how cyclical this business can be – and the past few years have brought unprecedented ups and downs.
We made it through the pandemic, which had a tremendous effect on how people viewed their homes. Work-from-home became the norm, so buyers moved away from urban centres and sought residential solutions that allowed for home offices.
On the positive side, Canadians became more cognizant of the importance of “home” when it comes to lifestyle.
We have also had mortgage interest rate increases, which are still far behind what happened in the late 1980s and early 1990s, but in the face of skyrocketing prices, forced many potential purchasers and sellers to the sidelines to wait things out.
A real estate purchase vs. financial investments
Inflationary pressures, economic uncertainty, housing demand exceeding supply . . . these forces and more presented challenges for both the industry and the buying public.
And yet, according to the Generational Trends study, six-in-10 of those surveyed believe that a residential real estate purchase will perform the same or better than their other financial investments over the next 10 years. This includes 35 per cent of participants who believe it will perform better.
Nearly half of those surveyed believe residential real estate will perform the same or better than their financial investments over the next 12 months (23 per cent of whom reported they believe it will perform better).
In addition, 35 per cent of participants said they are more likely to buy a primary residence in the next five years than they were in January 2020 before the pandemic – some of whom responded that they are much more likely to buy, which means housing demand will be even more pressing.
Plus, 35 per cent of those who already own a primary residence said they are more likely to sell in the next five years (12 per cent of whom are much more likely to sell). This will help with our demand-outpacing-supply issue.
If we zero in on Toronto, 46 per cent of survey respondents spanning the generations believe that residential real estate will outperform or match their financial investments in the next year, and 60 per cent believe it will perform the same or better in the next decade. Baby Boomers are the most optimistic about this, likely because we have lived through double-digit mortgage interest rates and economic downturns.
Research shows strong confidence in Canadian homeownership
Mustel Group is a leading market research and public opinion research firm, and Sotheby’s is a well-respected real estate sales and marketing company in Canada.
The Trends Report they facilitated and published offers wonderful news for Canada as a whole, as confidence in real estate typically represents a healthy economy. Market conditions change continually, but faith in real estate remains resilient.
Why is this confidence so strong?
There is a certain pride of ownership that cannot be replicated by renting. Whether a purchaser chooses to live in a low-rise community or a condominium, that person enjoys a sense of belonging to a community.
From an investment standpoint, a home or condominium is a tangible asset, and just look at the return-on-investment real estate has brought over time!
People understand real estate far more than they grasp the uncertainty of stocks, bonds and money on paper. They can see, feel and check on their home or condo, whether or not they live in it or rent it out.
Homeownership has a significant bearing on their lifestyle and financial future.
Yes, today’s prices are relatively high compared to the past, but remember that even decades ago, it was difficult to save for a down payment. We all realized we had to sacrifice to realize the dream of homeownership.
Today’s buyers understand that to own a home or condo, they must forego some luxuries they take for granted.
People are still buying new homes and condominiums and will continue to do so for the foreseeable future, especially with our historic immigration numbers.
Homeownership remains the Canadian dream – and it is a dream well worth pursuing!