Millennials, Boomers and Housing
by Shaun Cathcart Reprinted from CREA CAFE 14/01/2016
There are some people who are eager to tell a story about how Baby Boomers will be flooding the housing market en masse with larger single family homes as they downsize their living accommodations. No doubt Baby Boomers downsizing will play a role in supplying the existing home market over the coming decades, but let’s talk about what’s happening now.
Has some downsizing begun? Sure. But these are like the first snowflakes of the season. The predominant trend right now, I’d argue, is Baby Boomers not moving.
When you look across the social generations in Canada, Millennials are most likely to be your first-time buyers, while Gen Xers are most likely to be your move-up buyers and members of the Greatest and Silent generations (i.e. people over 70) are most likely to be your downsizers.
In the middle are the Baby Boomers, the oldest of whom are now 69 years of age but a majority of whom are actually in their 50s. The Baby Boomer generation is out of its move-up years for the most part but, as a group, still a long way from downsizing the family home. For now, the story is about how a large chunk of the housing stock is being occupied by Boomers who will likely be keeping their home off the market for some time to come.
At the same time, their kids (Millennials) are having babies of their own and are looking to buy something roomier. With the Millennials coming into their homeownership years well before their Boomer parents are likely to downsize, the share of population in its homeownership years is growing.
What happens in cities where demand for homes is high but land and policy constraints make expanding the single family housing stock a challenge? Prices rise. It’s the basic law of supply and demand. Is it any wonder the Toronto and Vancouver housing markets, which have a shortage of single family product, are seeing big price increases?