Boomers drive sales of luxury real estate

And financially support Gen Y home- buying

Baby boomers continue to drive sales in the luxury real estate market, upsizing their homes while also helping their Gen- Y offspring with home purchases, according to a new report.

The study by Sotheby’s International Realty Canada, which involved interviews with leading realtors in specific markets, examined generational differences between buyers of luxury real estate in Toronto, Vancouver, Calgary and Montreal.

It says when looking for top- tier real estate, baby boomers born between 1946 and 1964 gravitate toward traditionally prestigious neighbourhoods, though it said luxury properties in desired locations are scarce. In Calgary, it said luxury bungalow options were limited, while Toronto and Vancouver has a shortage of large condos.

Meanwhile, family- driven buyers from generation X, born right after the baby boomers, tend to prioritize neighbourhoods with high- quality schools in vibrant communities, it found.

“Prestigious private academies and top- rated public schools act as magnets for affluent families and school considerations drive the luxury home purchase decision for this cohort in every major market,” the report states.

When looking for high- end homes, homebuyers from Gen Y, also referred to as Millennials, tend toward trendy, urban neighbourhoods with high walkability scores.

In Calgary, most Gen Y luxury buyers choose condos or duplexes, usually within five kilometres of downtown. Infills and smaller homes were also popular, while condos were less desirable for this generation compared to sales in Vancouver, Toronto and Montreal, the report states.

Sotheby’s president and CEO Ross McCredie says he was surprised to discover how much baby boomer parents are helping their Gen Y kids with home purchases.

Not only are parents chipping in financially, they also tend to be heavily involved in the process.

The Sotheby’s report said the average entry price in Calgary for first- time buyers is about $ 363,000. The entry price for high- end real estate in the city is $ 800,000 to $ 1.5 million, it said, with detached single- family homes the most common purchase.

“As luxury real estate traditionalists, ( Calgarians) gravitate to this home type more than generational peers in other major Canadian cities,” the report states. “Survey results show that this cohort places a high priority on purchasing large homes with facades and landscaping that reflect status and prestige.”

More than 700 homes sold for at least $ 1 million last year, according to Sotheby’s, compared to 104 attached homes and 28 condos.

McCredie says he was also surprised to discover how important transit is to Gen Y homebuyers, even in the high- end real estate segment.

“They’re focused on transit in a big way,” McCredie said. “Even though they might be buying a $ 1.5- million condo, a lot of them have no interest in buying a car.”

Meanwhile, many baby boomers — who were widely expected to downsize in retirement and snatch up condos in droves — are choosing instead to upsize, the report found.

“People in their late 60s who have obviously done well for a variety of different reasons are choosing to sell whatever home they’re in today and actually buy an even bigger and more expensive home, typically in the same neighbourhood that they live in,” McCredie said.

The Sotheby’s report said significant financial changes such as the cashing in of stocks or sale of a company were the most common factors behind luxury home purchases in Calgary.