A new report released today by Mustel Group and Sotheby’s International Realty Canada reveals the impact of rising housing costs on young families across the country’s major metropolitan real estate markets, highlighting the significant contrast between the home ownership aspirations and realities of this demographic.
Mustel Group and Sotheby’s International Realty Canada’s “Modern Family Home Ownership Trends Report: The Evolution of the Canadian Dream” found that while 83% of “modern family” homeowners in Canada’s key metropolitan areas would prefer living in a detached single family home if budget were not a consideration, just over half (56%) of homeowners in this cohort actually purchased one. Furthermore, 43% of modern families who already own real estate but do not currently own a single family home have given up this “dream”. Another 18% have future plans to buy a single family home in the city centre; 21% plan to do so outside the city centre.
The first in a multi-part series focused on the home ownership trends of young urban families, the report is based on findings from a survey of 1,743 families in the Vancouver, Calgary, Toronto and Montreal Census Metropolitan Areas, with a focus on ones where the adults are between the ages of 20 and 45.
“This is the first Canadian study to focus on the home buying preferences and habits of this segment of young families, with findings based on actual home ownership data rather than purchase intentions,” says Josh O’Neill, General Manager of Mustel Group. “Results from the survey uncovered new data and trends within this key demographic.”
Despite challenges in affordability and compromises made in home ownership, survey results revealed that levels of satisfaction, as well as confidence in the real estate market is high. While 82% of modern families feel they have made compromises in the home they purchased, 93% are “very” or “somewhat satisfied” with their home. 78% of young, urban Canadian families believe their home will either outperform or match the performance of their financial investments in the next five years, with 48% stating that real estate will outperform financial investments.
“Young families are much more influential in Canada’s metropolitan real estate markets than many realize. With 9.1 million Canadian Millennials now entering the partnership, marriage and parenting stages of the family life cycle, the ranks of these ‘modern families’ are swelling,” says Brad Henderson, President and CEO, Sotheby’s International Realty Canada. “Our research dispels several urban myths about the housing preferences of this group. It suggests that the wave of demand for single family home ownership will continue to rise in spite of mounting affordability challenges. Moreover, it highlights the fact that cities will continue to face significant pressure to overcome these challenges with solutions that go beyond the addition of higher density housing.”
The Single Family Home “Dream” vs. Home Ownership Reality
8 in 10 (83%) young, urban family homeowners would prefer living in a detached single family home if budget were not a consideration, and only 17% indicated a preference for higher density housing options.
In spite of their desire to own a single family home, just over half (56%) of modern family home owners purchased one. When it comes to home ownership, 27% of modern families purchased an attached home or duplex/triplex/multiplex unit, and 17% bought a condominium.
The survey also revealed that 4 in 10 (43%) of modern family homeowners who do not already own a single family home have now given up their “dream” of doing so, citing high costs as the reason. 18% still plan to buy a single family home within the city centre while another 21% aim to purchase outside the city centre.
Condominium “Demand”: By Necessity
Mustel Group/Sotheby’s International Realty Canada survey results dispel assumptions that today’s young urban families prefer higher density living. Overall, only 5% of modern family homeowners reported that they would prefer buying a condominium if budget were not a consideration, while 12% indicated a preference for buying an attached home or duplex/triplex/multiplex unit. In Canada’s major metropolitan centres, desire for higher density living is clearly being driven by homebuyers outside the modern family demographic, while purchases by families are motivated by necessity over personal preference.
Home Characteristics, Compromises and Cost
Across Canada’s four largest metropolitan areas, and regardless of the type of property type purchased, more than half (56%) of modern families paid less than $500,000 for their current primary residence, with significant differences across regions. 37% purchased their home for less than $500,000 in Vancouver, while 44% did so in Toronto. In Calgary, 63% of young families purchased their home for less than $500,000 while 80% achieved this in Montreal. Only 8% of young, urban families purchased a home over $1 million.
66% of modern families bought a property under 2,000 sq. ft., with three-bedroom and two-bathroom properties being the most commonly purchased home.
Families placed the highest priority on achieving “value per square foot” in their purchased home, above design, layout and other feature considerations. Other top priorities include buying a “move-in ready” home that requires little to no renovation, achieving a specific number of bedrooms, and purchasing a home that is less than five years old.
82% of modern family homeowners reported that compromises were made in their home purchase; the most common are exceeding their target budget, buying a home that needs more renovation than desired, buying an older property, and having a smaller yard than desired.
High Satisfaction with Home Ownership
In spite of compromises made in their property purchase, the Mustel Group/Sotheby’s International Realty Canada survey revealed that 93% of young, urban families are “very” or “somewhat” satisfied with their home. Close to half (47%) report that they are “very satisfied” with the home they purchased.
Levels of Real Estate Confidence
Confidence in the real estate market remains high among young urban family owners across Canada’s major metropolitan areas. 8 in 10 (78%) believe their home will either outperform or match the performance of their financial investments in the next five years, with close to half (48%) maintaining that real estate will outperform financial investments.
The impact of steep housing affordability challenges on young families in Vancouver are clearly reflected in survey results.
- While 78% of young Vancouver families would prefer single family home ownership if budget were not a consideration, actual single family home ownership is the lowest of Canada’s largest metropolitan areas. 46% of modern family homeowners bought a single family home, while ownership of higher-density housing is more common in Vancouver than in other regions at 27% for condominiums, and 27% for attached/duplex/triplex/multiplex units.
- 55% of homeowners who do not yet own a single family home have given up their plans to do so, the highest abandonment rate of Canada’s major metropolitan areas. 31% of modern family homeowners still have plans to buy a single family home in the future, with 16% planning to do within the city centre and 15% aiming to purchase outside the city centre.
- While preference for higher-density housing alternatives is higher amongst Vancouver’s modern families than in other Canadian urban centres, less than a quarter (22%) of Vancouver families report a preference for condominium, attached or duplex/triplex/multiplex housing if finances were not a consideration.
- Like their counterparts in other major metropolitan areas, families in Vancouver share value per square foot and move-in readiness as two of the top priority features in the property they purchased. They are significantly more likely to prioritize having a secondary suite in their home as a revenue/mortgage helper: 11% consider this one of their top three priorities in buying a home compared to 5% who do so in Toronto, 3% in Calgary and 2% in Montreal.
- 90% of young Vancouver families express some level of satisfaction with their home purchase, although a lower percentage of families (40%) indicated that they were “very satisfied” with their home purchase compared to their counterparts in Calgary, Toronto and Montreal. Overall confidence in the Vancouver real estate market also remains high: 79% of Vancouver families believe that financial gains on their home will outperform or be on par with financial investments over the next five years, and half (50%) believe that real estate gains will exceed gains in financial investments.
Job insecurity, above-national average unemployment rates, and a prolonged economic recovery pose fundamental challenges for many in Calgary; however, stable housing prices have offered opportunities for homebuyers in the real estate market.
- Preference for single family home ownership is stronger in Calgary than in any of the other metropolitan areas surveyed: 91% of modern families would favour this form of housing over other options if budget were not a consideration. The rate of single family homeownership amongst young families is significantly higher here than in other regions, with 74% of modern family homeowners successfully purchasing this form of housing.
- The dream of single family home ownership remains strong among those families who have not yet purchased a single family home. Only 37% have given up on their dream of single family home ownership, the lowest level of the metropolitan regions.
- With the price of home ownership more accessible in Calgary, 63% of modern families purchased their current home for less than $500,000, regardless of housing type, while 33% bought their home for $500,000-$999,999. A nominal 4% of Calgary families purchased a $1 million-plus home.
- As in other major metropolitan areas, families in Calgary report prioritizing value per square foot and move-in readiness more frequently than other home features. They are also significantly more likely to prioritize buying a home less than five years old and having a garage, with 31% of Calgary responders indicating that these factors were among their top three priorities.
- In spite of uncertain economic and real estate market conditions, as well as compromises made in their home purchase, 91% of modern families in Calgary families expressed satisfaction with the home they own, with 42% indicating that they are “very satisfied”.
- Furthermore, real estate confidence is resilient: 64% of modern families who own property believe that their real estate investment will outperform or match their financial investments, with 31% asserting that real estate will surpass financial investment performance. Conversely however, 20% of Calgary families believe real estate will perform worse than their financial investments, the highest level of the major metropolitan areas surveyed.
Although housing affordability is a growing concern for families in Canada’s largest real estate market, the region’s robust economic fundamentals and healthy consumer confidence is reflected in the home buying trends and market sentiment levels of Toronto’s modern families.
- While 82% of young Toronto families would prefer buying a single family home if budget were not a consideration, actual home ownership is balanced almost evenly between single family homes at 50%, and higher density options which are owned by the remaining 50%. 34% purchased an attached home or duplex/triplex/multiplex unit and 16% own a condominium.
- Within the region, 42% of modern family homeowners who have not yet purchased a single family home have given up on the dream of ever owning one. Another 38% maintain future aspirations of buying a single family home, divided evenly between those who plan on buying within the city centre, and those who plan on purchasing a single family home outside the city core.
- Less than a fifth (19%) of families report a preference for buying a condominium, attached or duplex/triplex/multiplex housing if finances were not a consideration.
- Priority home features for Toronto families are in line with those in other major Canadian cities, with value per square foot and move-in readiness ranking as the top two in a home purchase. The focus on value per square foot, is somewhat stronger here than in Calgary or Vancouver, with 55% of families citing it as one of their top three priorities.
- Young families who own a home in Toronto are amongst the most satisfied, compared to their counterparts in other cities. 95% of modern families report that they are “very satisfied” or “somewhat satisfied” with their purchased home, regardless of challenges faced or compromises made. 46% indicated that they are “very satisfied” with their home, behind only Montreal.
- Confidence in the real estate market is highest among young Toronto families than in any other major market. 83% of Toronto modern families believe their home investment will outperform or match their financial investments over the next half decade, and 55% believe real estate gains will outperform their financial investments.
Montreal’s buoyant economy and favourable housing prices have enabled greater accessibility to home ownership than in other regions. This is reflected in positive market sentiment and high confidence levels amongst the region’s young families.
- Preference for single family home ownership predominates in Montreal: 84% of modern families would favour this form of housing over higher density options if budget were not a consideration, 11% would prefer an attached home or duplex/triplex/multiplex unit, while 5% would choose to buy a condominium.
- A single family home was attained by a majority of modern family homeowners: 61% purchased a single family home, a higher rate than in Toronto or Vancouver.
- For families who own real estate but have not yet purchased a single family home, a higher percentage (41%) maintain plans to buy one in the future compared to those who have given up on this aspiration (39%).
- With the median price of single family homes at $336,000, the lowest of Canada’s major metropolitan real estate markets, young families in Montreal paid less for their current home than in any other region. 80% of modern families purchased their home for less than $500,000 while 19% spent $500,000– $999,999.
- As in other major metropolitan areas, Montreal families ranked value per square foot and move-in readiness as their top two home features prioritized in their home purchase. Property age, lack of a garage and proximity to the city centre/downtown core were reported as the leading compromises in their home purchase, with 22%, 20% and 19% reporting these as being among their top three trade-offs made.
- Compared to those in other major metropolitan areas, Montreal families are among the most satisfied with their home purchase. Regardless of housing type or compromises made, 94% of modern family homeowners report that they are “very satisfied” or “somewhat satisfied” with their purchased home in Montreal, only marginally behind Toronto’s levels of 95%. 55% of Montreal modern families report that they are “very satisfied” with their home, surpassing the 46%, 42% and 40% of young families in Toronto, Calgary and Vancouver who share this sentiment.
Confidence in the real estate market is also high: 77% of young families believe that financial returns on their property will either exceed or match the gains on their financial investments in the next half decade, with 46% believing that real estate gains will surpass those of their financial investments. While strong, this is behind the confidence level of families in both Toronto and Vancouver.
The report is based on findings from an online survey of 1,743 families in the Vancouver, Calgary, Toronto and Montreal Census Metropolitan Areas (CMAs), with a focus on those where the adults are between the ages of 20 and 45. Over half of survey respondents are Millennial homeowners, while the remaining represent homeowners from the younger segment of Generation X. The sample was weighted to match Statistics Canada census data on the basis of age, household income and home ownership within each CMA and to bring the total sample into proper proportion based on relative populations. While margins of error only apply to random probability samples, the margin of error on a random probability sample of 1,743 respondents is ±2.3 percentage points, 19 times out of 20. Data for this report series was gathered from August 9 to September 6, 2018.
Download the 2018 Modern Family Home Ownership Report (released November 2018)
About Mustel Group Mustel Group has been a leading market research and public opinion research firm in Canada for more than 30 years, trusted by a wide range of the country’s most esteemed public and private sector institutions to design and conduct qualitative research, quantitative research and omnibus surveys in order to understand the thoughts and motivations underlying peoples’ emotions, opinions and behaviours. For further information, visit www.mustelgroup.com
Disclaimer* The information contained in this report references survey results, plus market data from MLS boards across Canada. Sotheby’s International Realty Canada cautions that MLS market data can be useful in establishing trends over time, but does not indicate actual prices in widely divergent neighborhoods or account for price differentials within local markets. This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information and analysis presented in this report, no responsibility or liability whatsoever can be accepted by Sotheby’s International Realty Canada, Sotheby’s International Realty Affiliates or Mustel Group for any loss or damage resulting from any use of, reliance on, or reference to the contents of this document.