Demographics are expected to have a profound effect on Canada’s housing market in the coming years, resulting in less housing turnover as well as fewer sales and listings, according to a new report by Scotiabank Economics.
But that’s not necessarily a bad thing.
“Contrary to some dire
predictions, population aging will not fuel a demographically-induced
sell-off in Canadian real estate,” Scotiabank economist Adrienne Warren
told a conference on global housing trends Monday.
“Today’s seniors are
healthier, wealthier and living longer than prior generations. They are
increasingly likely to own their own home and to live in their homes for
longer.
“Many will not need to tap into their principal home to finance retirement,” she said.
Home ownership rates
are only likely to decline as the massive wave of baby boomers, the
first of whom are now in their late 60s, start to hit age 75. But even
at that later stage of life, close to 70 per cent of Canadians still
tend to own and live in their own homes, said Warren.
And they’re usually too comfortable and attached to their communities, to move, Warren says in her report.
Over a five-year period, just 20 per cent of homeowners over 65 tend to move,
about half the rate of the rest of the population. When they do, it
tends to be into retirement communities or rental accommodation, which
bodes well for rental demand down the road, she noted.
Housing demand is also likely to be tempered in the next few decades, she said, by slowing population growth.
While the United
States is outpacing the rest of the world in recovering from the
devastating downturn of its housing market, “the long-anticipated
slowdown in Canadian housing activity is well underway” but not likely
to result in drastic dips in prices.
Sales are down about
10 per cent since last spring, housing starts have dropped from 220,000
to 180,000 year-over-year, first-time buyers and even investors are
taking a breather, said Warren.
All of that is likely to continue with job growth expected to slow, she added.
