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Home for sale in Toronto. (Peter Power/Peter Power/The Globe and Mail)
Home for sale in Toronto. (Peter Power/Peter Power/The Globe and Mail)

Aging baby boomers helping change Canada's housing market: CMHC Add to ...

Demographic changes from aging to immigration flows are helping shape Canada’s housing market of the future, the federal housing agency suggests in its annual report.

The Canadian Mortgage and Housing Corp.’s study of housing trends sees continued demand for condominium and smaller homes, institutional buildings such as old age facilities, as well as a lively market for renovators.

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The oldest of the baby boom generation entered retirement age this year, but by 2036, seniors will represent about one quarter of the total population in Canada, the report stresses.

That will mean more older households and more headed by single seniors, who will demand a different kind of residence from the two-story detached home they raised families in.

Condominiums already accounted for one-third of all starts in urban centres last year, compared with 29 per cent in 2009, but that trend likely will continue, says the CMHC authors.

“Aging households will support continued growth in condominium markets. We can also expect to see growing demand for home adaptations ... (and) the number of seniors in institutions would increase by a factor of almost two and a half,” the report states.

The agency advises that it is not forecasting the future, but extrapolating what could occur based on current trends.

Ian Melzer of the CMHC’s housing needs policy group said overall Canada’s housing market will continue to grow, but likely at a slower pace than the recent boom years.

Although Canada’s birth rate remains below the replacement rate, the population is increasing faster than at any time since the early 1990s thanks to immigration. Last year, new arrivals swelled to 271,000, the highest in four decades, accounting for two thirds of population growth.

Most are moving to Canada’s three biggest cities – Toronto, Montreal and Vancouver – but less so than in the past. Last year, 63.8 per cent of immigrants landed in the three cities, compared with 72.7 per cent in 2001.

As well, home ownership rates, currently about 68 per cent, tend to be higher among seniors, although they will require different kinds of homes, or adaptations to current homes.

“Some will move into smaller detached houses or row houses, some will move into condo apartments,” Mr. Melzer said. He points out that Vancouver is experimenting with units as small as 300 square feet, which may be attractive to single seniors.

Seniors tend to stay in their current homes as long as possible, so many will likely choose to adapt their living spaces.

“Typically, young seniors are not living in accessible bungalows, so there will be renovations ... installation of ramps or elevators, widening of the front door, bathroom doors. You might get replacement of bathtubs,” he explained. Another option is extensions to existing homes where seniors can live with their children.

The 184-page “Canadian Household Observer 2011” contains a number of surprising elements, although most of the report is based on previously released data. Among the findings: – Housing and related spending rose 7.1 per cent last year and now accounts for 20.3 per cent of Canada’s gross domestic product output, or about $330-billion – Super-low interest rates, coupled with a small inventory of existing homes for sale, helped push the average Multiple Listing Service price up by 5.8 per cent in 2010 to $339,042 – In 2006, only 35.3 per cent of recent immigrants (since 2001) owned their homes, compared to 68.7 per cent for non-immigrants. The CMHC notes, however, that home ownership among immigrants increases with their duration in the country.

– About 13 per cent of Canadians cannot afford a home in the area they live, a measure CMHC calls “core housing need.” Provincially, core housing need was highest in Newfoundland at 16.7 per cent, followed by Ontario and Nova Scotia at 15.1 per cent of households. Among cities, Toronto leads in core needs at 17.2 per cent, followed by Vancouver and Halifax at 16 per cent.

Still, the agency notes that 87 per cent of Canadian households “either live in, or had sufficient income to access, acceptable housing” in 2008.

The Bank of Canada and many economists have raised concerns about the level of debt, with household debt hitting a record 153 per cent greater than disposable income in the fall of 2011. The central bank said some households could be put under pressure when interest rates rise.

But the CMHC notes that 68 per cent of that debt is in mortgages and that most households can afford the costs associated with home ownership.

While household debt is a serious issue, the agency argues that a major shock to employment would constitute a much greater risk to Canadians’ ability to make mortgage payments than rising interest rates.

“Most Canadian households have the capacity to deal with adverse economic conditions, due to the high quality of mortgage credit in Canada, the substantial equity position of most Canadian homeowners with a mortgage, and households’ ability to adapt their discretionary spending,” the report concluded.

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