Baby boomers may be looking to trade their traditional single-family homes for the convenience and comfort of the condo craze, but a mass exodus is still likely a long way off. The convergence of baby boomers reaching retirement age at the end of an era with low interest rates has conjured fear about the impact on the housing market of a growing number of homeowners choosing to downsize to condominiums.
For retired people, going into a condo is a nice idea because they don’t have to do anything, but it can also be restrictive. It’s the transition from a bigger house with a yard to a smaller space. The National Household Survey shows that among older and younger homeowners, 20% are under the age of 35. On the other hand, those Canadians who are 65 and older demonstrate that 26.1% of baby boomers are living in condos.
Many retired baby boomers that have been empty nesters are now having their children return home. The adult children of boomers are living at home at about twice the rate as baby boomers themselves when they were that age. They need the space to house not only themselves, but also these boomerang young adults who are living at home and working. Baby boomers are the wealthiest generation of retirees to date, with almost 80% owning their homes. They don’t need the money for retirement right now.
Financial tools like reverse mortgages, which allow people to stay in their house longer while still making withdrawals in the capital, also allow homeowners to stay in their homes longer. Across Canada, the new home market, which includes condos and single homes, is being overbuilt by about 250,000 units or about a whole year worth of building.
The Canadian Real Estate Association doesn’t believe any major changes will happen to the Real Estate market until well into 2014, and when they do, the market will simply slow down and adjust to the changes, especially if the underlying economic fundamentals stay strong.
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