How Baby Boomers are breaking Canada’s real estate market - In one of the tightest real estate markets ever recorded in Canada, Boomers are not letting go of their homes. It appears the real-estate wealthy Boomers are to blame for yet again disrupting markets. Traditionally, seniors sell their family homes and downsize or move into retirement communities. Born between 1946 and 1964, Boomers, who own a substantial share of Canadian real estate, are breaking that trend. They are ageing in place.
More than 20 percent of Canada’s population will be 65 within the next five years and they aren’t yet ready to move into retirement communities or nursing homes. It has been well-documented that the pandemic has intensified the problem in Canada. Boomers witnessed the tragedy that occurred during the pandemic in Canada’s long-term care and retirement facilities and are cautious of that future.
A 2020 Royal Society of Canada report that looked at long-term care in Canada during the early waves of the pandemic, highlighted its damaging state. Canada experienced a far higher proportion of total country COVID-19 deaths in nursing homes than other comparable countries — 81 percent in Canada, compared to 28 percent in Australia, 31 percent in the US and 66 percent in Spain. By March of 2021, more than 50 percent of all deaths from COVID occurred in nursing and seniors’ homes, according to the Public Health Agency of Canada.
Boomers are deciding to renovate or hire private help inside their homes. Because of the equity accrued in their homes, many can hire private help to ensure they can stay in the homes they own in communities they love for as long as possible. This trend was also noted in a study this past summer that found a majority of Boomer homeowners - 52 percent- would prefer to renovate their current property over moving. The study also found 75 percent of Boomers own their own home, and 17 percent own more than one property.
The trend is creating a bottleneck in supply for first-time buyers and young families. Millennials are starting to have families and have struggled because there is less housing supply for growing families.
In Canada, the ageing-in-place trend is running smack into one of the tightest real estate markets ever recorded. There are currently fewer properties listed for sale in Canada than at any point on record. A report by the Bank of Nova Scotia found that Ontario, Alberta, and Manitoba have the lowest housing stock per capita.
Yet another factor cited in the trend for Boomers to stay in their homes has been the rise in reverse mortgages. Canadians aged 55 and over are able to draw on a portion of their home equity to boost their liquid income while staying in their homes.
Home Equity Bank, a major provider of reverse mortgage products in Canada, recently disclosed that the country’s homeowners are now carrying more than $5 billion worth of its reverse mortgages, the largest amount ever.