More than 1.4 million Canadians between the ages of 54 and 72 expect to buy a house in the next five years, according to a new survey by Royal LePage.
Boomers will be either downsizing to smaller properties in their hometowns or looking for greener — and cheaper — pastures away from big cities, the research shows.
Either way, this is “expected to have a meaningful impact on the housing market,” the report reads.
Canada’s housing market has already been through a boom, bust and echo, said Royal LePage president and CEO Phil Soper, quoting the 1990s bestselling book Boom, Bust and Echo by Canadian demographer David Foot.
The boom happened when boomers entered the market as first-time homeowners and then upgraded to larger homes a few years later. The bust had, in part, to do with the smaller number of gen-X homebuyers. The echo kicked in when millennials, the children of the boomers, started looking for a home of their own, Soper said.
Now we may be in another real estate market commotion caused by boomers, as Canadians in or approaching retirement look for homes better suited to life after work.
Real Estate Funding Retirement
Affordability is an issue for Boomers in BC, where they are banking on real estate to fund their retirement. Seventy per cent of British Columbians between the ages of 54 and 72 own their home, the lowest percentage among all regions surveyed. And of the respondents who own their home, 26 per cent say more than half of their retirement savings are tied to real estate – the highest rate of all provinces.
With so many Boomers relying on their homes to fund their retirement, 43 per cent say they are planning to eventually downsize their principal residence and almost half (42 per cent) will consider purchasing a condominium for the next home. 37 per cent will be willing to move to a new area in search of affordability.
“More and more we’re seeing Baby Boomers in British Columbia downsizing from a detached home to a condominium,” says Michael Trites, managing broker, Royal LePage NorthStar Realty.
“Increasingly they are transitioning into condos to unlock some of the equity they have built up in their homes, while gaining more flexibility as their healthy and lifestyle preferences change.”
Children Living At Home
A vast majority (88 per cent) of Boomers in BC believe that real estate is a good investment, and 42 per cent of respondents with children say they would be willing to subsidize the purchase of their children’s homes.
The survey found 44 per cent of respondents across Caanda with children living at home expect them to move out between the ages of 21 and 25; 21 per cent expect to leave between the ages of 26 and 30; 18 per cent anticipate their children will move out after the age of 35. This last number nearly triples in BC, where 24 per cent of respondents with children living at home expect them to move out after the age of 35.
“Our 2017 research into the largest group of first-time homebuyers in Canada, which we call the Peak Millennials, showed many were roosting in the family nest well beyond the traditional age of exit,” says Soper of Royal LePage’s Peak Millennial Survey, which showed 14 per cent of Peak Millennials surveyed are living with their parents.
“With this work, we have confirmed that Boomers are allowing children to reside at home well into adulthood. Yet they won’t stay forever, and when they go, the folks are going condo shopping.”
Our research does indicate that smaller cities and recreational areas will attract more investment than major cities,” continues Soper. “This large segment of the population views our big cities as generally unaffordable for retirement purposes.”
More than half (56 per cent) of Boomers polled nationally say they consider the housing market in their city or region to be unaffordable. This number jumps to 78 per cent of respondents in British Columbia.
When asked about their willingness to relocate, more than one-third (34 per cent) of respondents nationally stated they are open to moving to another city or suburb where property prices are more affordable. Of respondents willing to move for improved affordability, 35 per cent prefer to stay within one hour of their current residence, 30 per cent are willing to venture further out (one hour or more away), while 20 per cent say that they are open to living anywhere.
– Next Home Aug 17-31, 2018