Brian O'Donoghue

Sales Representative

Direct 647-405-3126 | bodonoghue@bosleyrealestate.com

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.

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 A new report is urging Canada to consider a luxury tax on homes valued at over $1 million as a means to rein in surging real estate prices.


Home prices across Canada have skyrocketed over the past year, with month after month of record-breaking sales.

On Wednesday, non-profit advocate group Generation Squeeze released a report, funded by the Canada Housing and Mortgage Corporation, and in it, they recommended an annual surtax on all homes valued over $1 million. According to the report, homes at this price point make up just 9% of all homes, or 1,362,789 households in Canada.


In theory, the proposed surtax would reduce the tax shelter that reportedly incentives Canadians to rely on growing property prices as a strategy for savings and wealth accumulation. Since 1972, the report explains that Canadian tax policy has sheltered principal residences from taxation to help homeowners build wealth, but this has generated a “number of significant, unintended problems,” such as inflated demand and average housing costs.


The tax, as laid out in the report, would start at 0.2% and increase to 0.5% for homes between $1.5 and $2 million and go up to 1% for homes over $2 million. These taxes are estimated to bring in $4.54 billion in annual revenue.


The report noted that the government could use the collected tax to provide portable housing benefits for renters or other recommendations from the Lab, including investments in new green co-op and purpose-built rentals.


Generation Squeeze, who compiled the report with input from 80 experts, recommends that the tax be deferrable, meaning it would not need to be paid until the home is sold or the property is inherited. This would address any issues arising from individuals with limited income or whose home value is beyond their own wealth.

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December capped off a record year for real estate in the Greater Toronto Area — both in sales and price. According to the Toronto Regional Real Estate Board, 121,712 sales were reported through its MLS® System in 2021 — up an astounding 28% from 2020 which was a hot market, and 7.7% over the previous record high set in 2016. But as demand remained strong, the number of new listings on the market couldn’t keep up, with just a 6.2% increase in new listings compared to 2020.The average sale price for the GTA was up 24% from the prior year to $1,157,849, and the City of Toronto was up 15.5% to an average of $1,033,029.


While some 6,031 sales were reported in the GTA in the twelfth month of 2021, this was 15.7% below 2020’s all-time December record of 7,154. That said, prices simply did not slow down, as all home types saw between an 18% (condos), 25% (semi-detached) and 28% (detached) increase year-over-year.


The death of the downtown condo throughout 2020 could not have been more turned on its head in 2021. So much so that TRREB credits the condo recovery in the 416 as a leading reason behind the resurgence of sales within the City of Toronto. While sales in the surrounding GTA were up an impressive 23.6% compared to 2020, the City of Toronto saw a significantly higher increase in its annual rate, with 2021 clocking in a rather stunning 36.8% above 2020 — a more than 50% higher jump in sales than the suburbs. In other words, if 2020 was the great migration from Toronto, 2021 was the great return.

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