"Aging in Place" - How Baby Boomers are breaking Canada's real estate market

Aging in place: 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

A new real estate report says Canada’s record-low supply of real estate is being compounded by an emerging trend: Baby Boomers who won’t let go of their homes.

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 aging in place.

More than 20 per cent of Canada’s population will be 65 within the next five years. Many Boomers are still working and they are healthier than previous generations, so they aren’t yet ready to move into retirement communities or nursing homes.

Although the trend had already started, and has been well-documented in the United States, the COVID-19 pandemic has exacerbated the problem in Canada, according to Engel and Volkers in their new 2021 year end real estate report. Boomers witnessed the tragedy that occurred during the pandemic in Canada’s long-term-care and retirement facilities and are wary of that future.

“Baby Boomer’s parents currently live in long-term care facilities, so they have witnessed their parents living in isolation as facilities put a halt to visits and residents typically had to stay in their rooms. As a result, Engel & Volkers advisors are reporting that clients who would typically be ready to downsize are increasingly delaying,” says Anthony Hitt, CEO, Engel & Volkers Americas they are wary of long-term care facilities and second, they are increasingly valuing the size of their homes during lockdowns.”

A 2020 Royal Society of Canada report that looked at long term care in Canada during the early waves of the pandemic, highlighted its ruinous state. Canada experienced a far higher proportion of total country COVID-19 deaths in nursing homes than other comparable countries — 81 per cent in Canada, compared to 28 per cent in Australia, 31 per cent in the US and 66 per cent in Spain..

By March of 2021, more than 50 per cent of all deaths from COVID occurred in nursing and seniors’ homes, according to Public Health Agency of Canada.

Hitt says Boomers are deciding to renovate or hire private help inside their homes. “Because of 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.”

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,” Hitt says.

The trend was also noted in a study by Royal LePage this past summer that found a majority of Boomer homeowners — 52 per cent — would prefer to renovate their current property over moving. The study also found 75 per cent of Boomers own their own home, and 17 per cent more than one property.

In Canada, the aging-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,” Shaun Cathcart, CREA’s Senior Economist said in a recent press release on the latest home sales figures for December.

Almost two-thirds of local markets were sellers’ markets, and there were just 1.6 months of inventory on a national basis at the end of December 2021 — the lowest level ever recorded by CREA.

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.