Land Values: Sorry, millennials—baby boomers aren’t downsizing

Predictions that older homeowners will crash the real estate market by cashing out have yet to come true. In Vancouver and elsewhere, don't look for them to call the movers anytime soon

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Predictions that older homeowners will crash the real estate market by cashing out have yet to come true. In Vancouver and elsewhere, don’t look for them to call the movers anytime soon

Linda and Patrick Power looked at downsizing from their Burnaby house a few years ago as they were approaching their 65-year marks. The four flights of stairs were just going to get harder to navigate. And taking care of the gardening on their 8,000-square-foot lot was starting to feel like nonstop farm work.

“We realized we could not keep up with that house,” says Linda, a retired flight attendant who still sounds like she has enough zest in her to keep 350 cranky passengers in line at a moment’s notice.

So they bought…another house in Coquitlam with about the same 2,600 square feet, but on only two levels and on a slightly smaller lot that required less work because it had a big pool in it. 

Not a condo. “Stratas are ridiculous, the rules you have to live by.” And definitely not a retirement complex.

The Powers are far from the only people I know who feel like they need just as much house space in retirement as they did all the other years. “We need a place to have all the kids and their kids over,” say some. “We need even more room when we’re retired because we need to be able to get away from each other when we’re both at home all day,” say those who are in couples. “I worked all my life for this much space, and I’m going to enjoy it here until I croak” is another take.

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That’s all very different from the predictions of 25 years ago made by demographer David Foot in Boom, Bust and Echo, which called for the real estate market to crash as all the boomers downsized and cashed out en masse. It’s a prophecy that was popular for a while, then got pooh-poohed extensively. 

But it’s back again. Last spring, the City of Toronto issued a planning bulletin forecasting that some of the city’s housing problems would be solved when the olds finally moved out of their mini-palaces. To use their words: “Older generations’ housing stock could accommodate an additional 207,240 persons by 2051 due to turnover to younger, larger households. One quarter of Toronto’s forecasted population growth to 2051 could be accommodated in the existing housing stock due to turnover.”

That came on the heels of a U.S. study from the previous summer, “The Great Senior Short-Sale,” by University of Arizona professor Arthur Nelson, which predicted that “millions of American homes could become unsellable—or could be sold at significant losses to their senior-citizen owners—between now and 2040.”

To be fair, Nelson’s study, which got a fair amount of attention, doesn’t say that will happen everywhere. Bigger, thriving cities—like Toronto and Vancouver, presumably—will do better. Smaller, more out-of-the way towns will not.

But many Canadian researchers and analysts and housing studiers are not at all convinced this is ever going to be the answer to the country’s housing crunch anywhere.

They say the boomers are holding on to their houses in ways not seen in previous generations. They’re living longer, they’re in better health, they still have the energy to do some upkeep—and that’s especially true of those who own homes, a group that’s likely to be better off socio-economically. Many homeowners appear to be financially comfortable enough that they don’t need to downsize to fund their retirement. And now they have the spectre of COVID‘s impact on retirement and long-term-care homes spurring them on. As Linda Power says, “I’m only leaving this house in a box.” 

Yes, some are moving into smaller places. Very slowly. Though that’s not as big a factor as death, the researchers tell me. Even death is not a game changer. Yes, people start dying at a more advanced clip from 65 on, but it’s not fast enough to make any real dent in the housing market. Again, those who die earlier are more likely to be poorer seniors, the ones already living in small apartments that they rent or own, not the ones with the three empty bedrooms. (Lest anyone think I’m a smart-assed millennial being insensitive to the olds, I am the olds, as are many of my friends.) 

As a result, the projection for how many 55- to 64-year-old householders in the Metro Vancouver region will downsize from single-family houses to something smaller in the next five years is…1,888 from a total of about 77,100 now, according to number-crunching done by Andy Ramlo, VP of intelligence at Rennie Group. That’s barely over 1 percent in five years, in a region that grows at the very least by 5 percent in that same period. Overall in Canada, Ramlo says, the percentage of people who maintain homes actually increases for the 65-to-74s. People don’t really start leaving their homes until after 85.

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Drilling into Vancouver proper, the expensive epicentre: the 55s-to-64s who owned houses in Vancouver back in 2006 accounted for 38 percent of that age group. Ten years later, the 2016 census found that 35 percent of them (now 65-74) were still single-family homeowners, as per analysis by Jens von Bergmann, the math whiz who helps Vancouver understand itself on a regular basis through mapping of census numbers.

That’s just what is happening with current residents. There’s also immigration to factor in.

That’s a big driver in Canada, more so than in the States. The U.S., population 330 million, accepts about a million immigrants a year. Canada, population almost 10 times smaller at 38 million, has accepted about 300,000 on average in recent years. 

So even as boomers in Canada do slowly, slowly downsize and/or die, there’s a much bigger and steadier wave of newcomers arriving and looking for homes, besides all the millennials who will be hunting for years to get themselves into something bigger than
a shoebox.

All of which suggests that we can’t count on the boomers disappearing as a solution for anything. But at least our kids and grandkids will have nice houses to visit for family gatherings.