Boomers driving market for upscale homes.
February 22, 2004 - Wealthy baby boomers are shying away from the traditional path of downsizing properties as they approach retirement and instead are looking to upgrade to more expensive homes, according to a study released by a Canadian real estate firm.
The First Wave report examined aging baby boomers and their impact on retirement housing in 18 major Canadian centres. The study found that a significant number of baby boomers – a demographic that tops out at those now 58 years old – were upgrading to more expensive properties. Some, the report says, are even assuming mortgages, a surprising trend at an age where many are enjoying the benefits of not having to make monthly payments.
“As the first wave of baby boomers head into their retirement years, REALTORS and builders alike are scratching their heads,” says a representative of the firm. “Bigger, better, and more expensive homes? Most of us work all our lives to be mortgage-free. The thought of incurring debt at this stage of the game has given many of us reason to pause.”
According to Statistics Canada, boomers holding mortgages is becoming more common. In 1999, 59 per cent of Canadian homeowners between 45 and 54 and 35 per cent of homeowners between 55 and 64 held mortgages. By 2001, those figures had jumped to 61.6 per cent and 39.1 per cent, respectively.
The report says that baby boomers are not content to live with the existing housing mix, especially as it pertains to retirement living. Low maintenance, security, and location are major factors driving activity. As a result, the report says, condominium sales are on the upswing across the country, representing anywhere from five per cent of the total sales activity in Cornwall, Ont., to a more significant 31 per cent in Vancouver and 30 per cent in cities like Toronto and Edmonton.
With the appeal of investing in U.S. real estate falling due to the high cost of health insurance and a high Canadian dollar, aging baby boomers are moving into major centres to be close to family, friends, cultural activities and health care services. Luxury condos, golf and adult-lifestyle communities, secondary residences, and smaller homes in better areas are prime targets for boomers looking to change residences.
With Canada’s senior population expected to double in the next 20 years to a level of approximately seven million, the report says housing inventory levels may be heavily taxed in the future, as builders and developers are only now moving to accommodate this demographic.