Ruminations: Moving Along ...

"First, they are wary of long-term care facilities and second, they are increasingly valuing the size of their homes during lockdowns."
"Baby boomers' parents currently live in long-term care facilities, so they have witnessed their parents living in isolation as facilities put a halt to visits and residents typically had to stay in their rooms. As a result, Engel & Volkers advisers are reporting that clients who would typically be ready to downsize are increasingly delaying."
"Because of equity accrued in their homes, many can hire private help to ensure they can stay in the homes they own in communities they love for as long as possible."
"Millennials are starting to have families and have struggled because there is less housing supply for growing families."
Anthony Hitt, CEO, Engel & Volkers Americas

It's a lack of supply, not investors, that has resulted in Canada's housing crisis, writes Ginny Roth. Municipal politicians are exacerbating the situation by opposing densification, she says.

It's a lack of supply, not investors, that has resulted in Canada's housing crisis. Photo by Ben Nelms/Bloomberg

Most of Canada's major cities are facing a tight real estate market. And the culprit? The reason housing stocks are so sparse and whatever is available costs the Earth? Why people who own houses they've lived in too long, overstaying their welcome, in the opinion of real estate agents and anxious would-be home buyers who face the double-whammy of scarce resales and sky-high prices. These are the people being pointed out; baby boomers who refuse to gracefully place their homes up for sale.

It hasn't always been like this. In years gone by the tradition has been that seniors would sell their family homes to downsize or to make the choice to live in retirement communities. Boomers, born between 1946 and 1964, are known in the real estate business to own substantial housing stock. And a number of conditions have emerged to make them want to hold on to the housing they own. Not just for nostalgic reasons, but comfort and security.

As well, people of those generations are healthier than their predecessor generations and don't feel prepared to move into retirement communities, or need to live in long-term care or nursing homes.
And many among them still hold down jobs. It's not only a Canadian trend, but one well documented in the United States as well. And the ghost in the room is COVID-19; the pandemic exacerbated a problem already in existence.

The extremely fresh scenarios witnessed of the tragedy during the pandemic in Canada's long-term-care and retirement facilities are well known to boomers, making them wary of such a future for themselves. A report issued in 2020 by the Royal Society of Canada studied long-term care in Canada during the early waves of the pandemic and highlighted a ruinous state of affairs.

A far greater proportion of total country COVID-19 deaths was experienced in Canada in nursing homes in comparison to other comparable countries; 81 percent of such deaths occurring in Canada, in comparison to 28 percent in Australia, 31 percent in the United States, and 66 percent in Spain. In particular the United States and Spain had frightful numbers of COVID-sick, hospitalized, in ICUs, and a high death toll ... in the general population at large. Whereas in Canada the bulk of COVID deaths were among the elderly living in congregate conditions.

Over 80 percent of all deaths occurring in Canada from COVID were the result of the elderly and immune-compromised in nursing and seniors' homes, according to the Public Health Agency of Canada. All of this has resulted in Boomer home-owners deciding to renovate their homes, or to hire private assistance in its upkeep. And this trend has created a supply bottleneck for first-time buyers and young families.

Royal LePage real estate noted the trend in a study, finding a majority of Boomer homeowners -- 52 percent -- would prefer renovating their properties over selling them and moving elsewhere. That same study found that 75 percent of Boomers own their own homes and that among them 17 percent own more than one property.

"There are currently fewer properties listed for sale in Canada than at any point on record", observed Shaun Cathcart, senior economist at the Canadian Real Estate Association, remarking on the latest home sales figures for December. There were basically 1.6 months of inventory on a national level, making two thirds of local markets sellers' markets, the lowest level ever on record by CREA.