Will investments in Metro Vancouver real estate outperform financial investments over the long term?
A strong proportion of local residents believe they will end up in the green, suggesting that the underlying confidence in the housing market has remained resilient, according to a new Mustel Group survey conducted for Sotheby’s International Realty Canada. Examples of financial investments include RRSPs, T4SA, stocks, and bonds.
Confidence levels for real estate outperforming financial investments in the next 10 years reached 36%, while 24% believe it will be the “same” and only 12% said “worse.” Such results are also consistent with residents in the Toronto and Montreal regions.
There are clear generational differences, with Generation Z (30%) and millennials (38%) less likely to believe their real estate investments will outperform financial investments over the coming decade, compared to higher proportions of Generation X (38%) and baby boomers (41%).
Between 21% and 26% of each generational cohort believe the 10-year investments will perform at par, while between 9% and 14% believe they will be worse off.
Amidst the current challenging economic and inflationary climate and the real estate downturn, there is less confidence in the 12-month outlook.
Far smaller proportions of each generational cohort believe real estate investments will outperform financial investments over the next year, with 23% of Generation Z, 16% of millennials, 26% of Generation X, and 23% of baby boomers expressing confidence.
Baby boomers (30%) are most likely to believe the performance differences will be at par, followed by Generation Z (26%), millennials (23%), and Generation X (14%). For those who believe real estate investments will fall behind financial investments, baby boomers and millennials are most likely to express this (30% each), followed by Generation X (28%) and Generation Z (12%).
Interestingly, 46% of Montreal’s baby boomers believe their real estate investments will outperform financial investments over the next year — a far higher proportion than the same cohorts in Vancouver, Calgary, and Toronto.
The survey also suggests a large proportion of Vancouver homeowners, regardless of generation, are more likely to attempt to sell their primary home or purchase in the next five years than before the pandemic.
Compared to before the pandemic, 31% of Vancouver residents are now more likely to buy a primary residence over the next five years, with Generation Z (34%) and millennials (33%) being the most likely cohorts.
“This intensified demand foreshadows an intensification in the pressures for additional housing supply and options for housing mobility,” states the report.