With the affects of the recent economic recession still impacting many Canadians, it is having a profound impact on the way we live. Baby boomers are working well into their sixties rather than retiring and our youth are living at home longer and staying in school to get additional education to have a chance at landing a good job in a very competitive job market.
The state of the economy has also had a huge impact on homeownership and the housing market in Canada. The recession has caused behavioral change and shifts in the demographic distribution of the population poised to impact the real estate market in unexpected ways. Many have become skeptical about the benefits of homeownership in Canada. The financial impact of an unstable economy and housing market in Canada has Canadians of all ages considering their housing options carefully.
The two largest demographic segments in Canada will have the largest impact in shaping the future of the housing market in Canada:
The Baby Boomers
At a time when aging baby boomers might be retiring, they continue working in order to build back up the retirement savings they lost during the recession. This has a direct effect on homeownership in Canada as it prevents younger generations from moving up in the workplace or from moving into the workplace to acquire the wealth they would need to drive new demand for homes.
Many boomers have become reluctant to sell their homes for two reasons:
1) They still owe on their mortgages and are waiting for the market to rebound so they can optimize the return on their investment.
2) They are healthier. Moving to retirement homes has been delayed by a few years because of the improvements in health care.
Many boomers are also planning on downsizing and moving to smaller homes to save money.
Generation Y Canadians
Generation Y Canadians, or echo boomers (born 1986-2005) will also have a large impact on the housing market in Canada. At approximately 7.5 million strong, this is the second largest demographic in Canada, and a growing economic force. Of this population segment, only 30% are homeowners. Generation Y Canadians are the largest pool of renters, however many have been hit hard the economic recession, causing them to be jobless or in positions that they are either underpaid or overqualified.
As a result, we have seen the rise of high-density-urban units and people are looking for live-work-play areas where they can get around either by walking or public transportation. The next decade is likely to bring a new look and feel to the housing market in Canada.
Both Boomers and Generation Y Canadians are looking to live in more urban areas that offer services, community and walk-ability. The changing needs of both generations will require that the real estate market respond in new and different ways.
With boomer looking to downsize and Generation Y Canadians looking to for more convenient housing, what is clear is that the growth of an economically challenged Generation Y Canadians will make affordable housing even more important.