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75% of Gen Z Adults Plan to Buy a Home Despite Affordability Hurdle
Home ownership continues to be a priority for most young adults.
Three quarters of Generation Z adults in Canada plan to buy a home in their lifetime, half of whom say that goal is “very likely,” according to a new study commissioned by Sotheby’s International Realty Canada and Mustel Group. Not only that, but 15% of them already own their primary residence.
Younger than Millennials, those in the Generation Z cohort are typically between the ages of 18 and 28.
“It is clear from our research that while rising housing affordability challenges are top-of-mind for Canada’s Generation Z homebuyers, the desire and demand for home ownership and specifically, single-family home ownership, has not subsided from previous generations,” said Don Kottick, President and CEO of Sotheby’s International Realty Canada.
“The older segment of this generation is now on the brink of first-time home ownership and are poised to be both an influential consumer force in the Canadian housing market, and a prominent voice in defining housing needs in our communities,” he added.
While the intention and desire to own a home is shared by many young adults, they’re also fully aware of the challenges they face, notably the restrictively high prices.
The survey found that 82% of those who haven’t yet purchased their home are worried that they won’t be able to live in the community of their choice due to rising home prices, 38% of whom are “very worried.”
Another concern is that they won’t be able to afford their preferred housing type. While 70% say they would prefer to buy a single-family home during their peak earning years if budget wasn’t a consideration, about half have already given up hope of owning one. Instead, half of those surveyed said their most likely purchase will be a higher-density housing type, such as a condo (25%), attached home/townhouse (18%) or duplex/triplex (7%).
The top barrier cited to home ownership was saving for their down payment. And for good reason.
The average time needed to save for a down payment in the country’s largest urban markets has increased to more than six years (74 months), according to the latest data from the National Bank of Canada. That’s based on a savings rate of 10% of the median pre-tax household income.
In Toronto and Vancouver, the time needed to save for a minimum down payment soars to 27.5 years and 36 years, respectively, which is why gifted down payments from family members are figuring more prominently in today’s home purchases—potentially up to 10% of all purchases.
Regional Differences in Home Ownership
Young prospective homebuyers face varying degrees of affordability challenges depending on where they’re looking to buy.
The relative affordability of housing in cities like Montreal and Calgary “are a true competitive advantage in retaining and attracting young people striving to buy their first home,” Kottick said.
Here’s a look at how key survey results compare in four of the key markets analyzed in the survey…
|Percentage of those likely to buy a primary residence in their lifetime||73%||71%||79%||78%|
|Percentage of Gen Z adults who already own a home||11%||15%||8%||12%|
|Percentage of those who worry they won’t be able to live in the community of their choice due to high prices||84%||82%||80%||82%|
|Percentage of those who want to buy a single-family home||72%||68%||64%||82%|
|Percentage of those who have abandoned the dream of home ownership||52%||56%||48%||39%|
- Steve Huebl·Real Estate News·December 10, 2021