National Post (National Edition)
Senior boom will reshape way we live
Housing market about to change, but how?
Canada is aging rapidly. Earlier this year, a Statistics Canada brief revealed that in 2018, there were 106 seniors aged 65 and older for every 100 children under the age of 15. Comparatively speaking, the population of children was twice that of seniors in 1986.
The two driving forces are increased life expectancy and fertility rates that are below replacement level.
It’s a demographic shift that is likely to have a significant effect on housing markets — but just what that effect will be is not entirely clear.
On the one hand, the increasing number of seniors could generate new demand for senior-focused housing.
At the same time, many seniors are finding aging in place attractive, as it enables
them to continue living in the same dwelling in familiar neighbourhoods. Such preferences might mitigate the demand for retirement homes or assisted living in the short run.
One of the key unknowns is how younger seniors — those under 75 years of age — will differ in their housing and other choices from the previous cohorts of similar age.
Seniors today are healthier and wealthier than their older counterparts. Many seniors are asset-rich and wonder whether they should continue to own or switch to renting.
With retirement, baby boomers no longer will be tied to the nine-to-five routine. Retirement affords new possibilities to relocate within the same town or to a different province, spend winters in moderate climates, and take on new hobbies and projects.
Better health also has led to longevity, which means seniors will have more time to live independently. During this period, they also may have to continue to support their children.
Changes in the economy, cultural shifts and spikes in housing markets all have contributed to millennials staying with their parents longer than similar-aged cohorts in the past.
Seniors with financially dependent children thus will have a constrained choice set as they might have to choose living arrangements that are optimal not just for them but also for their adult dependent offspring. For instance, seniors might dispose of large properties and rent smaller dwellings and use part of the proceeds to assist their children with home-buying.
The choice between renting and owning is not trivial for young seniors who now are approaching retirement age. They are likely to spend a decade or two before they may feel the need for assisted living. The choices they make now are likely to impact them for decades.
Statistics Canada’s General Social Survey from 2007 revealed that 80-plus per cent of those between the ages of 55 and 74 owned their homes. For those who were 75 years and over, three out of four lived in owned dwellings.
Furthermore, almost 80 per cent of those over the age of 55 lived in the same house for more than five years. At least 62 per cent had lived in the same dwelling for over 10 years.
The Statistics Canada survey revealed that young and old seniors were more likely to age in place. Only one in five respondents in the survey indicated that they would consider downsizing or purchasing a retirement home.
In the U.S., the number of homeowners who were at least 55 years old has increased by 9.6 million since 2006. At the same time, the number of younger homeowners under the age of 45 has declined by 4.3 million.
Older households in the U.S. are holding on to a large inventory of dwellings that is not available for purchase by younger cohorts. Eventually, American baby boomers will vacate their current homes to live in assisted housing. However, this may still be a decade or so away. Canadian demographics show similar trends.
In the meantime, if seniors age in place in large numbers, it could reduce the demand for senior residences. If the construction of senior residences is maintained at an average pace, the vacancy rates and hence the rents for senior housing would be expected to remain stable.
Seniors are likely to cause shifts in housing supply and demand in the early 2030s when they may face challenges with aging in place.
As they will then vacate the larger homes they have occupied for decades, the rise in inventory is likely to moderate housing prices of single-family dwellings, which will benefit older millennials raising young families.
Murtaza Haider is a professor of Real Estate Management
at Ryerson University. Stephen Moranis is a real estate industry veteran. They
can be reached at www.hmbulletin.com.