The luxury real estate market is evolving fast when the conversation turns to affluent millennials and what they are looking for in a home, according to Anthony Hitt, president & CEO, Engels & Völkers Americas, the global real estate company.
Hitt was commenting on a new PwC Canada study looking ahead at emerging trends for 2020.
The underlying theme of the report, when factoring in residential, office and retail? It’s no longer about space, but more about the services offered, inside and outside. It’s no longer about showing off or flashiness, but more about well-being.
PwC spoke with a wide range of industry experts – developers, investors, fund managers, lenders, brokers, advisors.
Individuals are investing more in health and wellness, lifestyle and home design, as opposed to materialistic goods, according to the study.
Other trends that came out of the report: the affordability issue and the softening of the single family housing market, seen through the numbers – inventory under construction in 2018 was 46,747 units, according to the Canada Mortgage and Housing Corp., down from more than 55,000 units in 2017. Prices have been levelling off.
Also, as anyone who lives in downtown Toronto knows, condominiums continue to dominate new construction in Canada (54 per cent of the inventory under construction in 2018). Many demographic factors pushing condo investments continues to be there – rising populations, more people moving into city cores, downsizing baby boomers – but the price gap between condos and single-family homes is narrowing. Land supply issues, increased demand for housing, impacts of government levies and taxes have only added to the affordability challenge for downtown Toronto. The mortgage stress test has been another factor in people’s ability to buy downtown. This is a segment of the market to keep an eye on in 2020.
But back to millennials.
Hitt has a rinkside seat for what’s been trending with this up-and-coming segment of the market. Regarding Luxury magazine caught with Hitt, to ask him about these growing trends, and the strength of the Canadian luxury real estate market in general.
RL: How does the millennial market differ from Gen X and Boomer generations when it comes to luxury real estate purchases?
AH: When it comes to luxury real estate purchases, Millennials are largely prioritizing access to surrounding amenities, proximity to urban areas and smart home tech integration. In the past for Gen X and Boomers, large traditional family homes with closed floor plans and spacious acreage in the suburbs were a desirable luxury.
Nowadays, the norm for a luxury real estate purchase has changed – especially for the current Millennial market.
We’re now seeing more people seeking out contemporary open concept designs, tech-forward capabilities, access to high-end amenities inside the home and easy access to outdoor amenities without the use of too much space.
Convenience and low maintenance living are key. With the popularity of these trends, a growing number of active Gen X and Boomer generations are downsizing into similar properties within bustling cities. It seems the Millennial tastes are influencing the Gen X and Boomer generations, and we expect this will continue.
RL: Are Canadians any different than Americans, when discussing these trends?
AH: Like Canadians, Americans are also seeking similar attributes when buying a luxury home. With the tight residential space in urban cities like New York, Americans are also designing their interiors and decorating spaces to feel and appear larger than they are.
Contemporary, open-concept designs are widely seen with floor-to-ceiling windows to bring in maximum natural light and lighter colour schemes are used for a minimalistic experience. Tech integration, like heated flooring and smart home tech, have become common in a standard luxury home in the U.S., as well.
While valuing the city experience over the suburbs has been trending, we are seeing more Millennials investing in large luxury estates within family-friendly communities for their long-term living. This is apparent in the United States and Canada. With remote work becoming a commonality, homebuyers have the option of buying a large waterfront mansion rather than a sleek modern condo in city cores. Clearly, consumer preference for two very different experiences will continue to impact trends in both the city and suburban residential markets.
RL: What are your thoughts on where the luxury real market in major Canadian metropolitan cities is heading for 2020?
AH: Going into 2020, there’s no doubt that the luxury real estate market in Canadian metropolitan cities will continue to grow as prices stabilize and desire for luxury living increases. With the trends in luxury amenities and forward-thinking design becoming the new standard in home buying, I’m confident that the luxury market will only grow bigger.
International buyer interest remains high, particularly from Mainland China and Hong Kong, and there’s increased consumer confidence. We expect to see cities like Toronto, Vancouver, Montreal and Ottawa as primary luxury hot spots in 2020.
Here’s the top 5 luxury design and amenity items on every wealthy homebuyer list, according to Engel & Völkers:
- Well-being amenities: Outdoor yoga decks, private parks and “tranquility gardens,” are becoming increasingly common – and this mantra is even finding its way into structural design projects, like the new 540 King Street West condominium, projected for completion in 2020, which is covered in lush greenery.
- Advanced integrated technology: Tech-forward lounges, advanced security systems and cameras, programmable heating and other smart-tech devices which learn homeowners’ behaviours, are unique amenities which can still be incorporated into a minimalistic space, making homeowners’ lives easier.
- Views: Large, open concept areas with floor-to-ceiling windows are one of the major contemporary design trends in 2019. Along with simplistic colour schemes (like light hardwood and cabinetry), which help make small spaces feel larger by incorporating natural light so it feels like a function of the space.
- Standalone furniture: this trend is especially seen in bathrooms, where large, standalone tubs invoke the feeling of ultimate relaxation – a huge selling point with wealthy millennials.
- Bringing the outdoors inside: Plants, natural stones and light colours are all ways you can design your space to make it feel harmonious with the environment – and truly relaxed.