How Baby Boomers Could Change the Real Estate Market in Winnipeg
January 29, 2021
The baby boomers have always been a force to be reckoned with, in part because there’s so many of them. Born between 1944 and 1966, they represent the largest spike in fertility rates in the 20th century, when Canadian women were having more than twice the number of children they’re having today.1 As such, they make up roughly a quarter of the total population in the Winnipeg census metropolitan area (CMA),2 and of that quarter, about 90% own their own homes.3 As this substantial demographic of home owners progresses into their golden years, what changes can we expect to see in the real estate market? Well, that all depends on how plucky this bunch decides to be.
Aging in place and the availability of homes
There’s a growing trend among greying Canadians to remain in their homes as they age rather than downsizing to multi-family buildings like condominiums, apartments, or supportive housing. According to a 2018 Ipsos poll, as many as half of the country’s baby boomers aren’t planning to downsize at all, with a vast majority indicating that they’re happy with their current living arrangements.4 With better health than in generations prior and more financial means than the average population in Canada,5 it’s looking like they’re well-equipped to do so.
But, if aging boomers choose to hold onto their properties, it could disrupt demographic patterns that typically see seniors leaving the real estate market and freeing up homes for younger buyers. Noting such shifts in Toronto, Inna Breidburg of the Canada Mortgage and Housing Corporation (CMCH) explains, “[i]f seniors don’t sell their homes, eventually it limits supply for all further generations … It has implications for the entire market.”6
Certainly, such a disruption could play out in Winnipeg if dauntless baby boomers choose to stay in their homes longer, making the search for affordable detached homes even more difficult for many. Only last September, Catherine Schellenberg of WinnipegREALTORS® commented on rising home prices, pointing out that while most Winnipeg sales used to occur in the $250,000-$299,999 price range, “first-time home buyers [are] having to go above $300,000 in their offer to acquire a home.”7 Of course, recent price hikes are tied to falling inventory levels resulting from the COVID-19 outbreak, but unless current home owners start moving into the rental sector or there’s a substantial increase in newly built housing, the detached sector will stay fiercely competitive for the foreseeable future.
Downsizing could shift the housing demand
Despite a desire among Canada’s independent baby boomers to age in place, downsizing could end up being the more attractive option in practice. Daily activities and home maintenance tend to become more challenging as we grow older, and many family homes aren’t designed to accommodate the physical limitations of advancing age – think front steps, narrow doors, and multi-level living. Plus, with rising prices for detached homes (the average in December was $342,289 – 8% above the same month a year ago8), many boomers could decide to cash in on their considerable home equity.
Though conservative by nature, some economic forecasts suggest baby boomers are more likely to downsize. In a long-range population and housing forecast for Winnipeg, the Conference Board of Canada states that most of this generation “will opt to live in apartment buildings or retirement homes,” and as a result, “the demand for multi-family dwellings will increase, while the demand for single-family dwellings will start to fall off.”
Similarly, the Royal Bank of Canada (RBC) expects that baby boomers will “release” half a million homes into the national real estate market over the next decade. However, they warn that boomers “won’t sell cheap” (that savvy lot!), which isn’t likely to benefit younger generations of buyers in the shorter term. Still, they predict the higher prices will be less of a problem for developers and renovators. In time, those buyers will add units to the homes or build multi-family residences in their place, and this additional inventory will contribute to more affordable housing.9
While all of this sounds like good news for first-time buyers and anyone with a condo to sell, long-range reports and next-decade predictions don’t exactly create a sense of urgency. If the Conference Board and RBC are correct, any shift in demand from detached homes to other types of housing won’t have an appreciable impact on the markets until around 2030. Still, if the pandemic has lasting effects on buyer preferences and people continue to clamour for detached homes, we could be looking at the release valve for the upward pressure on prices.
Of course, one has to paint in broad strokes to make housing predictions about a generation that spans 20 years – not all will suddenly choose to downsize, just as not all will choose to age in place for the rest of their lives. But, if they tend to follow one path over the other, we could continue to see the influence of this notable generation in the real estate market for years to come.
For whatever real estate transition you’re planning, Purplebricks has you covered. Our local Winnipeg REALTORS® can get you top market value for your home while keeping your health a top priority, and you could save thousands in commission by paying a low fixed fee to list your property. Plus, when you buy your next home with one of our REALTORS®, you’ll receive $2,000 in cash back* – it’s how we’re making buying and selling a home even better. Call 1-877-888-3131 to speak to a client specialist and discover how we can help you.
1. Statistics Canada: Generations in Canada
2. The Conference Board of Canada: Long-Term Population, Housing and Economic Forecast for Winnipeg
3. CTV News: Over 25% of Manitoba, Saskatchewan boomers planning to buy new house: survey
4. Ipsos: Canadians Boomers Say Downsizing their Home in Retirement Isn’t a Guaranteed Financial Windfall
5. CMHC: Housing a Senior Population: The Economic and Social Benefits
6. Canadian Broadcasting Corporation: GTA seniors delaying downsizing, putting housing squeeze on younger people: study
7. WinnipegREALTORS® September 2020 Market Report
8. WinnipegREALTORS® December 2020 Market Report
9. Royal Bank of Canada: Canada's Aging Population: What Investors Should Know for the 2020s