Feeling the echo
Baby boomers’ children gearing up to affect housing market, CMHC predicts
Anew generation of home buyers, the so-called echo boomers born between 1978 and 1992, is gearing up to exert a positive impact on Ottawa’s sluggish housing market, according to Canada Mortgage and Housing Corp.
While home ownership among echo boomers is currently on hold, in part because of that generation’s difficulty in landing permanent, wellpaid jobs, it should start accelerating over the next several years, according to Ted Tsiakopoulos, CMHC’s regional economist for the province.
His comments were part of a housing outlook conference held Thursday by the CMHC that focused on profiling Ottawa’s echo boomers. Presentations covered everything from the economic climate to the kinds of housing that the children of boomers will seek as they become homeowners over the next decade.
The conference also touched on the effect of boomer downsizing over the next decade as well as analyzing the current housing market and outlook for 2014 in Ontario and specifically in Ottawa. CMHC holds annual housing outlook conferences across Canada. This is the first to focus on echo boomers.
As a proportion of total Ontario homeowners, echo boomers should jump from a forecast average of 35 per cent between 2011 and 2016 to just under 60 per cent between 2016 and 2021, said Tsiakopoulos. At present, most echo boomers are renters.
Over 75 per cent of boomers will continue to own homes until 2021.
Although a higher-than-expected increase in interest rates and other factors could affect CMHC’s forecast, the residential construction picture across Ontario should be “very positive as the echo boomer story kicks in,” said Tsiakopoulos.
That growth in construction will be supported by baby boomers who downsize from their single-family homes into multi-family dwellings, including condo and other apartments, said CMHC market analyst Andrew Scott.
He foresees the demand for housing over the next 10 years being led by rows and semis, followed very closely by apartments and, just slightly behind that, singles.
“We don’t see any lack of demand among any housing type” through 2023, he said.
Sandra Perez-Torres, senior market analyst for the Ottawa area, said the local housing market will stabilize in 2014, thanks in part to economic spinoffs from large projects like the LRT Confederation Line. However, slower growth in income will mean a preference for more affordable multi-family dwellings such as row homes and condos. While starts of singles will grow marginally, new condo apartment construction will moderate as the existing inventory of unsold units is absorbed.
On the resale front, she said slower income growth will translate into a preference for more affordable products.
CMHC market analyst AnneMarie Shaker looked at housing starts in different areas of OttawaGatineau for 2013 and 2014. Overall, starts next year will scale back from 2013 while prices will mostly keep pace with inflation.
No change is expected in sales trends for the different areas. The west end, for example, which includes Nepean, Kanata and Stittsville, will remain robust in terms of starts and continue to enjoy the city’s largest resale market.
Ottawa Centre will remain largely rental, with those 20 to 34 years old representing 33.3 per cent of residents. “It’s a huge opportunity for condos to be rented out,” said Shaker, referring to the continued shortage of purpose-built apartments in the city.
City of Ottawa representatives spoke about the LRT Confederation Line but mostly addressed design, routing and other aspects of the multi-billion-dollar project. They said that construction will boost employment in the area — a possible boon to the housing market — and that LRT stations could positively impact housing in surrounding areas. Tremblay Station, adjacent to the existing train station, for example, could spark a transformation of the surrounding lowrise commercial neighbourhood to mixed office-residential structures.
Susan Marcovitch, vice-president of sales and marketing at Cardel Homes, was one of the few builders attending the conference, which drew mostly real estate agents and lenders. She said she wasn’t surprised at the CMHC forecasts, including the demand for all types of housing forms over the next decade.
“We have housing to meet all those needs. If people are looking for more affordable homes, they’ll buy our towns. Downsizers — we have condos to meet those needs.”