More Than a Third of Boomers Are Thinking of Buying a House in the Next Five Years — and Theyre Not Looking to Downsize

Canada’s baby boomers show few signs of ceding their winning place on the property ladder despite the howls of frustration from millennials and Gen Z consumers, who feel priced out of the housing market. But a quarter of the boomer generation have helped or are ready to help their kids buy a home.

Some 3.2 million Canadian boomers — 35% of the postwar cohort born between 1946 and 1965 — say they would consider purchasing a new home in the next five years, according to a Leger survey of 2000 Canadian boomers for Royal LePage released on Wednesday. Of those Toronto boomers who were thinking of moving within the next five years, 59% said they were considering downsizing but 41% weren’t sure or didn’t think they would choose a smaller home. In fact, 57% of respondents in Toronto were thinking about getting a place about the same size as their existing home and 26% actually thought about upsizing.

For more than a decade, research has suggested that baby boomers weren’t necessarily interested in downsizing. Now that appears to be the reality, said Royal LePage CEO Phil Soper.

Although more than half of those surveyed said they were considering a move to a rural location, the suburbs might be more realistic, he said. Cottage country prices have accelerated so quickly that some of those traditional resort areas may not be as affordable as a suburban home where a boomer can probably buy as much space and still have some cash to devote to travel or retirement.

“For most boomers living in a house with stairs is no big deal. When they get to the point where they want a single floor they’ll just move again and for most of them that doesn’t necessarily have to be for a decade,” Soper said. Many boomers — aged 56 to 75 — are still working, he said. Many would like a home with less maintenance to free up money for retirement or travel.

Nationally, a quarter of boomers surveyed said they have helped or would help their children buy a home. In Toronto — where 26% of respondents said they still had children living with them and the average price of a home is about $1.1 million — 29% said they would consider assisting their kids.

34% of working baby boomers in Toronto said they would consider delaying retirement to help their children with a down payment. That compares to 27% nationally.

But 29% of Toronto boomers didn’t foresee their children moving out at all. Soper said that is a reflection of two things: people love their children and recognize homes are now so expensive there isn’t a realistic financial alternative, and the wave of immigration from parts of the world where intergenerational homes are the norm is starting to take hold.

The Leger survey shows that real estate accounts for a significant portion of the affluent boomers’ wealth, with 40% indicating that property accounted for at least half of their net worth. In Toronto that figure was 54%, the highest in the country. 75% of baby boomers own their home and 64% live mortgage free.

The online Leger survey of 2,000 Canadian baby boomers was conducted June 9 to 14 and is considered accurate within 2.2% 19 times out of 20.

Source: The Star

Toronto Housing Market Eases Again in June, Home Sales Down for Third Month

Toronto saw the lowest number of homes trade hands in a year in June as the pandemic-fuelled demand that drove the market to record highs starts to fade with immigration still muted. Home sales in Toronto fell 9.1% in June from the month before to 8,885 transactions, the third consecutive monthly decline, according to data released by the Toronto Regional Real Estate Board. Despite the declining number of sales the seasonally adjusted average price of a home remained virtually unchanged last month at $1.06 million (US$859,890), the data show.

The COVID-19 pandemic helped make Canada’s housing market among the hottest in the world over the last year as record low mortgage rates and increased demand for larger living spaces ran up against the persistent shortage of housing stock that has long plagued its largest cities. But now with lockdown measures easing, vaccinations rising, and the economy picking up, the circumstances that created the boom are starting to ease, and the immigration-driven population growth that has long underpinned the country’s housing market remains muted.

“The record pace of sales has run its course as pent-up demand has increasingly been satisfied in the absence of normal population growth,” said Jason Mercer the Toronto real estate board’s chief market analyst, in a media release accompanying the sales data. “With this said, a persistent lack of inventory across most segments of the market will keep competition between buyers strong.”

Vancouver, Canada’s priciest home market, showed a similar decline in June home sales from the previous month, though activity both there and in Toronto remains above where it was a year ago and elevated by historical standards. Toronto’s record start to the year caused that city’s real estate board to raise its forecast for average home prices to $1.07 million from the $1.025 million it predicted in February.

Also in Toronto, in a reversal of the pattern seen for much of the last year, annual growth in condominium sales in June outpaced the sales growth for all types of ground-based homes, suggesting interest may be returning for the denser housing types the pandemic put out of favour, but are often the first choice of immigrants newly arrived to the country.

“We have seen market activity transition from a record pace to a robust pace over the last three months,” said the Toronto real estate board’s president, Kevin Crigger, in the press release. “While this could provide some relief for homebuyers in the near term, a resumption of population growth based on immigration is only months away.”

Source: Globe and Mail
Source: The Star
Source: Financial Post

Metro Vancouver Real Estate Sales Eased in June as Benchmark Price Was Flat

The real estate market in Metro Vancouver eased in June from its record-setting pace in March and April. The Real Estate Board of Greater Vancouver says the number of home sold in the region totalled 3,762 last month, up 54% from the 2,443 sales recorded a year earlier, but down 11.9% from the 4,268 sold in May 2021. Sales last month were 18.4% above the 10-year June sales average.

The benchmark price for all residential properties in Metro Vancouver was $1.175 million, a 14.5% increase from last June and up 0.2% from the prior month. Sales of detached homes rose 45.7% to 1,262, with a benchmark price of $1.8 million that was 22% higher on the year but virtually unchanged from May.

Apartment home sales surged 60.5% to 1,774, with a price of $737,600 that was up 8.9% from the prior year, while sales of attached homes increased 53.8% to 726. The benchmark price of $946,900 was up 17.4% from June 2020, but just 1.1% higher than May.

“Metro Vancouver’s housing market continues to experience strong seller’s market conditions, although the intensity of demand has eased from what we saw throughout most of the spring,” REBGV economist Keith Stewart said. New listings increased 1.1% to 5,849, but that marked an 18% decrease from May. Total listings decreased 5.1% from a year ago to 10,839.

Stewart said low interest rates, a growing economy and an improving job market is continuing to create solid economic fundamentals for the Metro Vancouver housing market. “We’re now seeing a market that’s beginning to normalize from the torrid pace in the spring. This is making multiple offers less common, allowing subjects to be seen on offers more frequently again, and is making new price records less likely.”

Source: The Star

Montreal, Quebec City Home Prices Rose in June While Sales Fell: QPAREB

The Quebec Professional Association of Real Estate Brokers says Montreal and Quebec City home prices soared and sales fell in June, as the province began to rebound from the COVID-19 pandemic.

The real estate association says the median price of single-family homes and condos in Montreal hit $508,000 and $365,000 respectively, up from $496,000 and $365,000 the month before. Median prices for single-family homes and condos in Quebec City reached $310,000 and $207,500 respectively, up from $310,250 and $210,000 in May 2020.

Montreal sales for the month amounted to 4,619, down 7% from 4,950 in June 2020 and 14% from 5,398 in May 2021. Quebec City sales totalled 738, down by 20% from 919 last June and almost 18% from 897 in May.

The association says residential sales in Montreal and Quebec City fell significantly in June because of a lack of single-family homes available for sale and rising prices, which kept the markets heated.

Source: The Star

Housing Affordability Hasn’t Been This Bad in Canada in 31 Years — and It’s Going to Get Worse

A a new study finds that the Canadian “housing mania” has driven affordability to its worst level in 31 years. The RBC affordability measure, which charts ownership costs to household income, climbed 0.9 percentage points for Canada in the first quarter of 2021 to 52%, the third straight increase.

That means that average buyers must now spend 52% of their income to cover the costs of a typical home in Canada — the highest it’s been since 1990. In Vancouver, the least affordable market, it’s 74.9%; in Toronto, 67.7%.

Nor is the problem limited to these two notoriously pricey markets. Buyers have flocked to smaller cities and towns, narrowing their price advantage over larger centres. “Since the pandemic, mortgage carrying costs have increased more as a share of household income in Windsor, Hamilton, London and Niagara than in Vancouver, Ottawa, Montreal or Toronto,” said RBC senior economist Robert Hogue. Few markets have escaped this, with affordability declining the most in British Columbia, Ontario and Nova Scotia.

Rising home prices also wiped out the gains in affordability made in the spring of 2020 when the federal government boosted household income through pandemic aid programs. Nor is the situation going to get better any time soon; in fact it’s likely to get worse, said Hogue.

Even though home sales have been moderating from “unsustainably-strong levels,” it won’t be enough to immediately re-balance many markets because housing supply remains tight. “We expect prices will continue to rise in the near term, further eroding housing affordability,” said Hogue. Condos, whose prices eased earlier in the pandemic, had provided a more affordable alternative, but now their inventories are shrinking as more buyers rush in.

There are still pockets of Canada where housing remains relatively affordable, says Hogue. In the prairie provinces and Atlantic Canada (except Halifax) home prices have yet to exert “abnormal pressure” on buyers. Saint John, New Brunswick, stands out as a beacon of affordability. So much so that this market, the country’s most affordable, is attracting buyers from all over Canada.

Home sales are in record territory and “demand-supply conditions are near the tightest they’ve ever been,” said Hogue. Saint John’s measure of income needed to cover housing actually inched lower in the first quarter to 23.4%. But RBC does not expect that to last. “Property values are heating up fast and will drive up ownership costs in the period ahead,” said Hogue.

Source: Financial Post

Building Permits, May 2021

Following four consecutive months of reaching new highs, the total value of building permits dropped a record $1.6 billion (-14.8%) to $9.5 billion in May. Every component was down, with multi-family dwellings in Ontario accounting for nearly three fifths of the overall national decline. On a constant dollar basis (2012=100), building permits decreased 14.5% to $7.1 billion.

Multi-family permits in Ontario pull residential sector down

The value of permits for multi-family dwellings dropped 20.6% to $3.3 billion in May, the lowest value since August 2020. Ontario was responsible for the majority of the decline.

All provinces except for Newfoundland and Labrador posted a decrease in the value of permits issued for single-family dwellings, which fell 10.6% nationally to $3.2 billion. Quebec accounted for almost half of the national decline, with fewer permits issued in municipalities outside of the census metropolitan areas. Overall, the value of permits issued in the residential sector pulled back 16.0% to $6.5 billion.

Non-residential permits drop due to Ontario and Quebec

Construction intentions for the non-residential sector were down 12.2% to $3.0 billion in May, with Ontario and Quebec falling 21.5% and 22.9% respectively.

Commercial permits tumbled 15.8% to $1.6 billion overall. Ontario dropped 33.9% as no permit in excess of $25 million was issued for the province in May, compared with six in the previous month, worth a total of $295 million.

The value of permits issued for industrial buildings fell 14.6% to $511 million. Seven provinces reported a decline in this component, with Quebec recording the largest decrease. Quebec saw an uptick in April, largely due to a $105 million permit issued for renovations to a mining facility in the municipality of Sept-Îles.

The value of institutional permits decreased 3.4% to $900 million. Gains in four provinces, led by British Columbia and Manitoba, were not enough to counter a $115 million decline observed in Quebec.

Source: Statistics Canada

New CMCH CEO Says Best Way to Combat Soaring Home Prices is Building New Housing

The new leader of Canada’s national housing agency says the best way to combat soaring home prices is to build more housing. In some of her first public comments since taking the helm of Canada Mortgage and Housing Corp. in April, Romy Bowers said she is concerned about the spike up in home prices over the past year and the level of homeowner indebtedness.

“I do think housing is becoming a really significant societal issue,” Ms. Bowers said in an interview. “What worries me about escalating house prices is that it exacerbates the gap between homeowners and people who are not homeowners.”

Since the start of the pandemic, homeowners have been able to take advantage of record low borrowing rates and have seen their household wealth increase as property values jumped. Meanwhile, renters, many of whom earn low wages, suffered employment losses or were required to continue working in congregate settings when COVID-19 was quickly spreading. And even though rental rates fell in the city centres, rent is still high.

Cities are becoming more unaffordable. While first-time home buyers are unable to save enough for a down payment, older homeowners are not selling in part because their alternatives, including condos, are so expensive.

“It really makes me feel that we need to double down on some of the things that we have been working on – our focus on supply, our focus on rental, our focus on creating more dense neighbourhoods in our cities,” said Ms. Bowers, referring to CMHC’s programs to repair rental units and build new rental housing.

Ms. Bowers said she has heard from many young people that homeownership seems so out of reach. “In my mind, the best way to address house price escalation is to provide more supply,” she said.

Under Ms. Bowers’s predecessor Evan Siddall, CMHC expanded its focus of providing mortgage insurance to include providing affordable housing to vulnerable populations. Like Mr. Siddall, Ms. Bowers said she believes the glorification of homeownership needs to end. She said more needs to be done to add more homes per square kilometre in urban centres, a process also known as densification.

Ms. Bowers said there is “no silver bullet” to quickly adding supply. But she said there are lots of barriers to development at the local level, such as zoning issues and nimbyism, or not in my backyard, from homeowners resistant to denser neighbourhoods.

Ms. Bowers said she has spent her first 90 days as chief executive officer meeting agency staff and listening to more than 100 external housing stakeholders to discuss the agency’s role in housing and how it can improve.

She said CMHC’s announcement  that it will loosen its insurance requirements for home buyers will not lead to higher home prices or fuel demand because the changes simply move CMHC back in line with its private-sector competitors. Ms. Bowers said CMHC made the initial decision to tighten rules at the beginning of the pandemic when the economy was shutting down, job losses were mounting, and there was great uncertainty about the housing market. CMHC, which used to be the largest provider of mortgage insurance, expected the two private-sector insurers to follow suit but they did not. As a result, lenders funnelled more of their business to CMHC’s competitors.

Source: Globe and Mail