The Baby Boomer Generation and The Housing Market
By Elli Davis, May 25, 2012
The baby boomer generation is a generation formed by those who were born shortly after World War II, between the years 1946 and 1964. With increasing age, people’s needs and wishes (certainly including their dreams about their ideal home) change. What impact can the aging baby boomer generation possibly have on the housing market?
US Birth Rates by Wikimedia Commons
Who are they?
Starting in 1946, the number of babies born significantly increased year after year. There was a baby boom all over the world, which is precisely the reason why the generation born after the war is called the baby boomer generation. It is not quite certain who came up with this term, but that does not matter today.
What is important is the fact that as of 2012, about 6 million of people aged 48 to 66 years live in Canada. In 2036, they will actually make up approximately one quarter of the total population in our country. This generation has been the most crucial “driver of household formation for the past 40 years” in Canada. Even today, boomers influence the market considerably, although mostly indirectly through their children. The impact of the generation called echo-boomers is, however, a topic for another article. It is their parents, the baby boomers, whose needs are expected to be of unbelievable influence in the coming years.
Boomers and Their Influence
In the past, baby boomers have already demonstrated the huge effect they have on the market. The strongest sustained period of new home construction in Canada was in the 1970s, when the baby boom generation entered the market. Starts reached an unbelievable 274,000 units in 1976. From the 1970s all the way until the 1990s, new home construction was extremely strong. All this happened mainly thanks to the baby boomers.
In the next two decades, boomers are predicted to “continue to drive demand in the housing market, as has been the case over the last four decades.” As argued in a study published by the Canadian Mortgage and Housing Corporation, they are indeed one of the major factors influencing the future of Canada’s housing market.
Expected Future Impact
Let’s concentrate on perhaps the most crucial effect this aging generation is expected to have on the market. Baby boomers, as you can see, form a significant part of the population and a huge part of the workforce. Once they reach retirement age, they will not only leave their jobs, but many might also want to move from their family-sized homes. Living in a more or less empty two-storey house is not ideal for seniors: such places are too big, they require too much work, and at a certain age walking up the stairs is a real struggle. It is absolutely understandable that seniors might want to live elsewhere.
House by Jay Woodworth
By 2030, when the aging boomers will probably look for new homes, housing trends are expected to change noticeably. An unbelievable 80 per cent of new housing demand is predicted to come from people of their generation. Moving to a smaller home is a logical option and therefore demand for smaller homes, as well as various old age facilities, is expected to go up once boomers become seniors.
Currently, condominiums form about 11 per cent of the Canadian housing market, but this number is expected to increase soon. Condos are already hugely popular and many boomers may start selling their properties in the next couple of years in their favour. In 2006, 57 per cent of condominium owners were over the age of 50 and 17 per cent were older than 75. In 2030, the share of multiple housing units in Canada is forecast to increase to 68 per cent. The current level is about 47 per cent. Multiple-family homes are another option for aging parents.
Not everyone is willing to move from their current home, however, no matter how large it is. Regardless of their dreams about a smaller living space, seniors love their houses and want to keep them as long as possible. About 42 per cent of boomers have paid off their mortgage completely, which could be another reason for them to stay in their current homes. However, more often than not, their homes need to be significantly renovated to make living in them easier. Even with a large percentage of seniors staying home, baby boomers are undoubtedly going to have an immense impact on the market in the coming years.