More than 85 per cent of Vancouver’s “top-tier” home buyers from the baby-boomer generation are buying primary residences within five kilometres of downtown, according to a new report by Sotheby’s International Realty Canada.
2015 Top-Tier Generational Trends:A Comparative Study of Top-Tier Real Estate Trends Across Generations in Canada reveals the results of a qualitative survey of leading agents in four key urban markets to discover behavioural trends and preferences of the nation’s luxury home buyers.
Baby-Boomers
The report found that luxury home buying boomers in Vancouver tended to be traditional in their real estate tastes, favouring high-status neighbourhoods such as Dunbar, Kerrisdale, Mackenzie Heights, Point Grey, Shaughnessy and South West Marine Drive.
However the survey found an emerging trend in that 85 per cent of luxury home buyers in Vancouver’s boomer generation purchase their primary residence within five kilometres of downtown.
This group also demonstrated an increasing preference for walkability, strong community feel and proximity to transit connections, particularly the SkyTrain. This cohort is more likely to move into a neighbourhood or condo building in order to be closer to friends, and is increasingly gravitating towards newer areas such as Olympic Village and False Creek because of their walkability and accessibility.
Ross McCredie, CEO of Sotheby’s International Realty Canada, told REW.ca, “We tend to think of baby-boomers as empty-nesters who are downsizing. What was really surprising result of the survey was the large number of baby-boomers who are actually upsizing, or ‘rightsizing’ and finally buying their dream home. Those in their late 60s have more disposable income, they’ve enjoyed capital appreciation and probably done well on the stock market, and have likely seen a transfer of wealth from their parents.
“Most people think mainland Chinese buyers are the key driver behind luxury home purchases in the Lower Mainland, and they are an important part of it, but the biggest component of that market is Canadian boomers, who are the wealthiest generation this country has ever seen.”
The report said that the majority of this group have a household income of $300,000 to $500,000, with household incomes in excess of $500,000 common. As a result, these boomers are unlikely to rely on outside sources for their initial down payment and are more likely to use mortgages as a financial strategy rather than anecessity.
More than 80 per cent of Vancouver luxury home buyers within this generation also own a vacation or investment property, most often in a warm destination such as California or Arizona, or in Whistler or on Vancouver Island, said the report.
Generation X
Sotheby’s found that Generation X luxury homebuyers tend to spend $2-4 million to purchase their primary residence. Detached single family homes with a minimum of 2,500 to 3,000 square feet are the most common home purchase among this group in Vancouver.
With Vancouver’s West Side becoming increasingly out of the financial reach of even these top-tier buyers, communities such as Cambie Village, Grandview, Mount Pleasant, South Main and Trout Lake, with their village-style shopping districts, farmers’ markets, engaged neighbourhoods and local festivals, have become top-tier neighbourhoods.
The report added that, for many Generation X top-tier homebuyers in Vancouver, a genuine neighbourhood feel is more important than a location’s prestige. While proximity to a desirable public or private school is another major consideration, this group is also likely to consider a neighbourhood’s walkability to shopping, restaurants, grocery stores, markets, community centres and public transit as top priorities.
McCredie commented, “Many Generation X top-tier buyers tend to buy east of Main Street, because it is a family-oriented neighbourhood that is similar to the neighbourhoods they grew up in, only more socio-economically diverse.”
Survey findings also indicated that although more than 75 per cent of Gen X top-tier homebuyers are purchasing their primary residences within five kilometres of downtown Vancouver, this generation shows the most willingness to move away from the downtown core in order to get more square footage for their growing families.
Generation Y – Millennials
According to the report, Generation Y luxury homebuyers typically spend $800,000 to $1 million on their first home in Vancouver, which is twice as much as the average first-time Vancouver buyer (according to the typical $506,600 cited in the BMO 2014 First-Time Home Buyers Report).
Top-tier Millennial buyers are likely to buy a condo ranging most commonly from 800 to 1,000 square feet – the smallest acceptable home size for this generation across the four surveyed cities.
Sotheby’s found that walkability is a major priority for this Vancouver cohort, as neighbourhood amenities such as stylish restaurants, bars, cafes, nightlife, shopping and gyms are treated as extensions of their personal living spaces.
Millennials are redefining the boundaries of Vancouver’s luxury neighbourhoods, as areas with cultural and socio-economic diversity, such as Mount Pleasant, Main Street and Gastown, as well as newer communities such as Olympic Village, are actively sought after and seen as more desirable than traditional luxury and heritage neighbourhoods.
McCredie said, “These younger generations are creating the prestigious neighbourhoods of the future, just as generations before them did in North Vancouver, for example.”
This cohort is highly reliant on the financial support of family in their purchase of real estate, with more than 70 per cent receiving some form of financial gifting or inheritancetowards their down payment. As in other major metropolitan markets, more than 90 per cent carry mortgages on their homes.
The report added that less than 10 per cent of this group own a secondary or vacation property as they are focused on the purchase of a primary residence.
