How Aging Canadian Boomers Will Impact Housing Demand

Written by Posted On Wednesday, 07 February 2007 16:00

There are lots of reasons why someone aged 55 or older might be ready to move from their single detached home to a condominium apartment, but a new study suggests that most baby boomers won't be ready to make that move for a few more years.

Canada Mortgage and Housing Corp.'s Intentions to Buy and Renovate survey from 2006 says that while older households (55 to 75 years of age) are likely to downsize after their children move out, "this data suggests that they generally prefer to stay in a single detached home rather than move to an apartment or other type of multiple unit."

An analysis in CMHC's Housing Now publication says more than half of these homeowners are mortgage-free, "so any financial motivation to downsize to a less expensive apartment or other type of multiple dwelling may be outweighed by the comfort and space of a single detached home in a family neighbourhood. However, the tendency toward apartment living does increase in the later retirement years, taking a sharp turn upwards after about the age of 75, when seniors increasingly begin to face challenges with daily activities or health."

Builders and housing analysts have been eying the aging homeowner population, trying to predict when the shift to smaller houses and condominiums will be most pronounced. CMHC's Canadian Housing Observer says that Canadians aged 55 or older currently account for about 15 per cent of homes bought in Canada, with seven per cent of purchases by people aged 65 or more. The Observer says that "all else being equal, the number of sales made to those aged 65 or more should at least double by 2031 in light of the expected doubling of the population of this group, and the share of sales attributed to buyers aged 55 or older should rise to one in four."

It suggests that builders will need to produce housing for this group that will address their housing and non-housing needs, target a variety of budgets and be available in a range of locations, including established neighbourhoods where the buyers may have lived for a number of years.

But CMHC notes that households move less often as they age, so even though people 55 and over buy a significant number of homes, "the number of dwellings they purchase is actually small in relation to their weight in the general population."

Statistics Canada reports that in 2002, almost half of Canadian households had moved in the previous six years. The Observer says that "virtually all households maintained by those under the age of 30 had moved at least once, many probably more than once," but that only 30 per cent of households aged 55 to 64 and 20 per cent of senior households moved during that period.

The number one reason why people below the age of 55 moved was to find a larger house. For those 55 and older, people moved because their children had left, or because of the death of a spouse, or because they wanted to be closer to their extended family. Most people below the age of 65 did not cite health reasons for moving, but for those over 75, that was the main reason for moving.

The research shows that up to the age of 65, most of those who move from a detached home prefer to buy another single detached home.

"The majority of senior movers, on the other hand, chose apartments and rented their new homes," says the Observer. "Older movers were more likely than younger movers to select homes with only one floor. They were also much more likely to move to condominiums. Nearly three-quarters of senior movers who chose condominiums opted for apartment condos, presumably because they required less upkeep than other types of condominiums."

CMHC says that the mobility patterns in the study indicate that "aging baby boomers will move gradually out of single-detached houses into other smaller types of dwellings, including condominiums and rental apartments. Because the vanguard of baby boomers only began turning 55 in the last few years, this movement is just beginning. Some of these baby boomers will make changes to their housing now, but many others will wait, preferring to stay in their present homes, adapting them as necessary."

The Intentions to Buy and Renovate Survey says that overall, 74 per cent of current homeowners intend to buy a single detached home. In Vancouver, where house prices are highest, 13 per cent of respondents said they will likely buy an apartment and 10 per cent said they would buy a semi-detached house. In Toronto, five per cent said they would likely buy a condo apartment, six per cent said they would buy a row house, 10 per cent were looking at a semi, and 76 per cent planned to buy a single detached home. In Montreal, seven per cent were likely to buy an apartment; eight per cent a row house, and 18 per cent said they would buy a semi-detached home.

Rate this item
(0 votes)
Jim Adair

Jim Adair has been writing about Canadian real estate, home building and renovation issues for more than 40 years. He is the former editor of Canada’s leading trade magazine for real estate professionals, as well as several home building, décor and renovation titles. You can contact him at [email protected]

Realty Times

From buying and selling advice for consumers to money-making tips for Agents, our content, updated daily, has made Realty Times® a must-read, and see, for anyone involved in Real Estate.