Traditionally, once parents are empty-nesters and have reached retirement age, it’s time to downsize the family home and move to a smaller, more manageable dwelling or retirement community that will provide support in aging. But today’s Baby Boomer generation isn’t ready to move, and many older adults are remaining in their homes, making the tight housing market in Canada and the United States even harder for younger buyers to enter.
According to a recent National Post report, more than 20 percent of Canada’s population will reach age 65 within the next five years. Many of these Boomers are still working, are healthy and active – certainly not ready for a move into a retirement community. With greater wealth and health than previous generations, adults born between 1946 and 1964 are able to keep up their homes and plan to age in place as long as possible.
Making a move in today’s real estate market may not make sense to older adults, even if their home is larger than they really need. Downsizing to a newer, 3-bedroom bungalow with a smaller yard often is more expensive than staying put and hiring out yard work and cleaning, or renovating for current and future needs.
After witnessing the severe isolation and care gaps experienced by their parents in nursing homes during the pandemic, Baby Boomers are planning to stay in their homes and communities for as long as they are able. Unfortunately for Millennials with young families trying to purchase a home in today’s market, the shortage of available housing has driven up the price significantly and created bidding wars over homes that would have sat on the market for months just a few years ago.
The outlook for first-time buyers doesn’t look rosy anytime soon as interest rates rise and people paying cash swoop in to nab homes quickly with new technologies. Higher rents will also hinder the efforts of younger families trying to save for the downpayment on a home over the next several years. Although new housing construction is picking up again, it is not keeping pace with demand and is still out of reach financially for most younger adults and certainly for single-income families. But the housing market will not remain hot forever, there will be a cooling-off on the horizon in time.
According to the Royal Bank of Canada, with a low inventory and continued demand, it is expected that property values will remain high in the first months of 2022, with 2023 anticipated to bring a more balanced housing market. With more housing starts, a calmer demand, and a greater government commitment to providing affordable housing, more Millennials are expected to join the ranks of homeowners in Canada, if they watch spending on travel and eating out to save for housing investment.