A new generational trends report  released today by Mustel Group and Sotheby’s International Realty Canada reveals that even in light of escalating costs of living and rising housing prices nationwide, an overwhelming majority of Generation Z buyers are self-reliant in saving for their first homes, and are employing diverse strategies to overcome financial obstacles to home ownership.  

According to Mustel Group and Sotheby’s International Realty Canada survey results, 37% of urban Canadian Generation Z adults expect to purchase their first home in less than five years, while 43% anticipate buying between five and ten years from now, including nearly one-third (29%) who expect to purchase in five to eight years.  30% expect the purchase price of their first home to be $350,000–$499,999, while 26% expect to pay $500,000–$749,999. A previously released report by Mustel Group and Sotheby’s International Realty Canada had revealed that approximately half of this cohort state that their most likely first home purchase will be a higher-density housing type, with 25% reporting that their first home purchase will likely be a condominium, 18% saying that their first home will be an attached home/townhouse and 7% stating that their first home purchase will be a duplex/triplex. 39% reported that they are most likely to buy a single family home as their first residence.

Newly released findings reveal that the most common source of funds for their down payments will be personal savings, with 67% of urban Canadian Generation Z adults reporting this as a primary source. This is followed by a financial gift from family (25%), a loan from a financial institution other than a mortgage (24%), sale of financial assets such as stocks and bonds (18%) and receiving a family inheritance (16%). 

The Mustel Group and Sotheby’s International Realty Canada  “Financing the Future of Canadian Housing: Generation Z Trends Report” focuses on the financial strategies and sentiments of the country’s next generation of first-time home buyers as it relates to home ownership.  It is the second in a multi-part report series based on Canada’s first in-depth study of the housing intentions, aspirations and preferences of Generation Z, and is based on a survey of 1,502  Generation Z Canadians who are over the age of majority and between the ages of 18 and 28 in the Vancouver, Calgary, Toronto and Montreal Census Metropolitan Areas.  

“The influence of Generation Z is rising with each passing year, and their impact on Canada’s real estate market is set to be substantial,” says Josh O’Neill, General Manager of Mustel Group. “Results from this survey reveal the high level of confidence that young Canadians have in housing and demonstrate how they are overcoming financial barriers to attain home ownership.” 

Of the personal and financial measures this group plans to take to save for their first home, the most common, mentioned by 51% overall, is to secure a full-time job with a higher salary. This is followed by reducing or eliminating personal spending (42%),  earning extra income through a second job (41%), and reducing or eliminating eating out (37%). Other measures include living with family (30%), reducing or eliminating vacations (29%), delaying having a child (28%), and reducing or eliminating entertainment, health, or fitness expenditures (25%). 

A noteworthy segment of Canada’s Generation Z is also anticipating an alternative ownership structure for their first home. While freehold, full ownership is the most likely structure for a first home purchase, reported by 41% of respondents, 24% of urban Canadian Generation Z adults expect to co-own their first home with family, while 13% expect to co-own with friends or other parties who are not family. Those living in Toronto and Vancouver are more likely to report that their first home will likely be co-owned with family or friends. 

Across every metropolitan area, survey results also reveal a high degree of confidence in the real estate market. Overall, 83% of urban Canadian Generation Z adults agree that home ownership will play a major role in achieving a financially stable retirement, including 40% who “strongly” agree with this sentiment. 71% believe that a home purchase will perform the same (32%) or better (39%) than financial investments such as their RRSPs and TFSAs.

“Even though Canada’s Generation Z homebuyers are confronting significant housing affordability concerns, it is clear that they not only desire home ownership, but regard it as being integral to their financial security and planning,” says Don Kottick, President and CEO, Sotheby’s International Realty Canada. “Many amongst this resourceful generation are planning their first real estate move and are taking major steps and making considerable sacrifices to save for their first down payment. With one in three Gen Z adults expecting to buy their first home within the next five years, we can only expect the social, economic and political clout of this group to have a growing influence on the Canadian housing market.” 

 
Market Highlights

Vancouver

In a region notoriously challenged by high housing costs, newly released Mustel Group/Sotheby’s International Realty Canada survey results reveal that Vancouver’s Generation Z adults are confident in the future of the region’s housing market performance and consider home ownership integral to their financial plans and future retirement, even as they devise diverse strategies to save for their first down payment.

Even as Greater Vancouver’s MLS® Home Price Index (HPI) composite benchmark price for residential properties steadily climbed 18.5% year-over-year to reach  $1,255,200 by January 2022, 36% of Generation Z adults anticipate buying their first home within five years. 43% expect to buy a home in five to ten years, including 33% who expect to purchase in five to eight years. Unsurprisingly Vancouver Gen Z respondents, along with their counterparts in Toronto, are more likely than those living in Calgary and Montreal to expect that they will pay more than $750,000 for their first home. While 19% expect to pay less than $350,000 for their first home, 20% expect to purchase a first home priced between $350,000–$499,999 and 31% expect to spend $500,000–$749,999. A notable 16% expect the price range of their first home to be $750,000–$999,999 and 14% anticipate paying more than $1 million. 

As in the case of other metropolitan areas, Vancouver’s Generation Z reflected a high level of self-reliance when it comes to saving for home ownership, with 62% of survey respondents reporting that personal savings will be a primary funding source for their down payment. Other leading down payment sources include a financial gift from family (cited by 31%), loan from a financial institution outside of a mortgage (23%), sale of financial assets such as stocks and bonds (23%) and a family inheritance (21%). 

Top personal and financial measures taken to attain home ownership reflect this generation’s autonomy in planning for home ownership: 49% plan to secure a full-time job with a higher salary while 45% will earn extra income through a second job.  39% are prepared to eliminate or reduce personal spending, while 36% will move in with family or reduce or eliminate eating out respectively. Other key measures include living with friends and roommates to save money (26%), reducing or eliminating entertainment, health, or fitness expenditures (26%), and reducing or eliminating vacations (25%).

Generation Z in Vancouver, as well as in Toronto, are more likely than those living in Montreal to believe their most likely first home ownership structure will be co-ownership with family, reported at a rate of 27% in Vancouver. Another 13% expect to co-own with friends or other parties who are not family. However, freehold, full ownership remains the most likely scenario for Vancouver Generation Z’s first home purchase, reported by 39%. 

Overall, despite well-documented challenges to housing affordability, confidence in the real estate market is high amongst Vancouver’s next generation of home buyers. 86% of Generation Z adults maintain that home ownership will play a major role in achieving a financially stable retirement, including 44% who “strongly” agree with this sentiment. A significant 75% believe that a home purchase will perform the same (28%) or better (47%) than financial investments. 

Calgary

According to previously released Mustel Group/Sotheby’s International Realty Canada findings, Generation Z adults in Calgary are amongst the most optimistic of Canada’s major metropolitan markets about their prospects for primary home ownership. Buoyed by confidence in a strengthening economy and supported by relatively affordable housing prices and costs of living, 78% report that they are likely to own a home during their lifetime, with 53% indicating that they are “very likely” to do so. Newly released survey findings now reveal that 44% of the region’s Generation Z adults expect to purchase their first home within five years, while 36% expect to do so in five to ten years, including 26% who anticipate a purchase in five to eight years

Despite Calgary’s 11.4% year-over-year gain in its MLS Home Price Index composite benchmark price to $458,800 by January 2022, the region continues to boast some of Canada’s most accessible urban real estate prices. It is not surprising then, that Calgary’s Generation Z adults as well as those in Montreal, are more likely than those living in Toronto and Vancouver to expect to pay between $350,000 and $499,999 for their first home, with 44% of Calgarians anticipating that their first home will fall within this range. 28% expect to pay less than $350,000 for their first home while 19% expect to spend $500,000–$749,999. 5% expect to pay between $750,000– $999,999, and a nominal 4% expect to pay over $1 million for their first home. 

As in the case of other metropolitan areas, Generation Z adults in Calgary reflect a high level of self-reliance in saving for first-time home ownership. 64% report that personal savings will be a primary funding source for their down payment. This is followed by a loan from a financial institution other than a mortgage (cited by 23%) and the sale of financial assets such as stocks and bonds (19%). 17% of those in Calgary expect a financial gift from family to support their first down payment, while 16% expect to utilize a family inheritance. 16% also report that they will use credit cards debt to contribute to their first down payment.

The top personal and financial strategy to save for a down payment is securing a full-time job with a higher salary, reported by 54% of Calgary’s Generation Z adults. This is followed by reducing or eliminating dining out (47%), taking a second job to earn extra income (46%) and reducing or eliminating personal spending (43%).  Other key measures include living with family to save money (31%) and delaying having a child (31%). Furthermore, while freehold, full ownership of a first home is the most likely scenario for 43% of Calgary Generation Z adults, 22% expect to co-own their first home with family and 14% expect to co-own with friends or others who are not family. 

Overall Generation Z in Calgary are also confident in the future of the region’s housing market performance and view home ownership as integral to their financial plans and future retirement.  86% of those surveyed report that home ownership will play a major role in a financially stable retirement, including 41% who “strongly” agree with this sentiment. 68% believe that a home purchase will perform the same (26%) or better (41%) than their financial investments. 

Toronto

According to newly released survey findings from Mustel Group/Sotheby’s International Realty Canada, Toronto’s Generation Z adults are not only primed for home ownership, they are also deploying diverse strategies to overcome rising housing prices and affordability concerns to save up a down payment for their first home. 

Even though the Greater Toronto Area’s MLS Home Price Index composite benchmark price for residential properties rose 33.3% year-over-year to a record high of $1,259,900 by January 2022, 36% of Generation Z adults anticipate buying their first home within five years, while 44% expect to buy a home in five to ten years, including 28% who expect to purchase in five to eight years. 

13% expect to pay less than $350,000 for their first home while 23% expect to buy a first home priced between $350,000–$499,999 and 29% anticipate spending $500,000–$749,999. Notably, Toronto’s Gen Z respondents along with their counterparts in Vancouver, are more likely than those living in Calgary and Montreal to anticipate paying more than $750,000 for their first home: 19% expect the price of their first home to be between $750,000 and $999,999, while 16% expect to pay $1 million or more for their first home. 

Like their counterparts across the metropolitan areas surveyed, Toronto’s Generation Z reflects a high degree of self-sufficiency when it comes to saving for the down payment for their first home. An overwhelming 70% of survey respondents say personal savings will be a primary funding source for their down payment. The next most frequently cited down payment funding sources are a financial gift from family (reported by 27%) and a loan from a financial institution (26%).  The sale of financial assets and withdrawal from RRSPs are reported by 20% and 16% respectively. 

The most common personal and financial strategy this group plans to take to save for their first home is to secure a full-time job with a higher salary, reported by 55% overall. This is followed by reducing or eliminating personal spending (47%),  earning extra income through a second job (42%), and reducing or eliminating eating out (37%). Other strategies include living with family (35%), reducing or eliminating vacations (31%), delaying having a child (29%), and reducing or eliminating entertainment, health, or fitness expenses (29%). 

Like their counterparts in Vancouver, Generation Z adults in Toronto are more likely than those living in Montreal to report that they will likely co-own their first home with family, with 26% citing this as their most likely ownership arrangement. Another 12% expect to co-own with friends or others who are not family. Despite these alternative models, freehold, full ownership remains the most anticipated ownership structure for Toronto Gen Z’s first home purchase, reported by 39%. 

84% of Generation Z adults in Toronto also report that home ownership plays a major role in their plans for a financially stable retirement, including 41% who “strongly” agree with this sentiment. Confidence in the future performance of the housing market is also high, with 73% believing that a home purchase will perform the same (33%) or better (40%) than their financial investments. 

Montreal

79% of Generation Z adults in Montreal are confident that they will buy a primary residence in their lifetime according to a previously released Mustel Group and Sotheby’s International Realty Canada, and newly released survey results reveal that 37% expect to purchase their first home within five years, while 46% expect to do so in five to ten years, including 31% who anticipate a purchase in five to eight years.

Although the MLS Home Price Index for Montreal residential rose 22.0% year-over-year to  $530,100 by January 2022, housing in Montreal remains affordable relative to other major Canadian metropolitan areas, such as Vancouver and Toronto. As a result, the region’s Generation Z adults, along with those in Calgary, are more likely than those living in Toronto and Vancouver to expect to buy a first home priced between $350,000 and $499,999, with 41% of those in Montreal anticipating that their first home will fall within this range.  An additional 25% expect to spend less than $350,000 on their first home. 22% expect their first home to be priced between $500,000–$749,999 while 8% of Montreal respondents expect to buy a first home priced between $750,000– $999,999.  4% expect the purchase price of their first home to be above $1 million. 

Generation Z adults in Montreal, like their counterparts across Canada’s major metropolitan areas, also reported a high level of self-reliance when it comes to saving for the down payment of their first home. 64% of respondents indicate that personal savings will be a primary funding source for their down payment. This is followed by a loan from a financial institution other than a mortgage (cited by 24%) and a financial gift from family (21%). 16% report that they will use credit cards debt to help fund their first down payment, followed by 14% who expect to utilize family inheritance. 

The leading personal and financial strategy to save for a down payment is securing a full-time job with a higher salary, which was reported by 47%. This is followed by reducing or eliminating personal spending (36%), taking a second job to earn extra income (36%) and reducing or eliminating dining out (33%).  Other key strategies include reducing or eliminating travel and vacations (30%) and delaying having a child (28%).  

Although freehold, full ownership is the most likely scenario for Montreal Generation Z adults’ first home, reported by 45%, another 19% expect to co-own their first home with family while 14% expect to co-own with friends or others who are not family. 

Generation Z adults in Montreal view home ownership as integral to their financial plans and future retirement: 77% of those surveyed reporting that home ownership will play a major role in a financially stable retirement, with 36% “strongly” agreeing with this sentiment; however, they are the least likely to feel bullish about real estate compared to those in other metropolitan areas. While 36% believe that a home purchase will perform the same as their financial investments, less than one-third (31%) believe that their home will outperform financial investments, compared to 40%–47% in other regions surveyed.

The report is based on findings from a survey employing an online methodology using a robust panel of 1,502 Generation Z adults between the ages of 18 and 28. in the Vancouver, Calgary, Toronto and Montreal Census Metropolitan Areas (CMAs).  The panel is maintained to be representative of the Canadian population and provide high-quality data. Panelists are recruited by a double opt-in method from large databases of reputable channels using industry standards of panel quality assurance, validation, verification and best practices for panel management.  The sample was weighted to match Statistics Canada census data based on 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 1,502 respondents is ±2.5 percentage points, 19 times out of 20, and ranges from ± 4.5 to 5.4 points for 325 – 476 respondents). Data for this report series was gathered from October 25 to November 10, 2021. Please note that percentages cited may not add to 100% due to rounding. 

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*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 neighbourhoods 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.