The housing market is a fixer-upper
The generation gap comes to a neighbourhood near you.
The current pandemic has implications for every aspect of modern life. It's easy to find articles about the implications for restaurants, air travel, public transit — you name it. The housing market is no different. Already, there are signs that smaller and mid-size homes will be among the first to see sales bounce back.
But there are other large trends at work in the national housing market. To see this, it is best to revisit the state of affairs before the outbreak of the pandemic. A report released a few weeks before the lockdown focused on baby boomers. They answered a series of questions about their housing plans. These are not idle questions. By 2024, one in five Canadians will be 65 or older. It’s a huge demographic and it will have a big impact on housing.
The survey found that 86% of respondents intend to stay in their homes “as long as possible.” That means different things to different people. Nearly half of respondents said that aging in place had been a consideration when shopping for their current home. That suggests there won’t be a generational change in the market anytime soon.
Among those who said they would likely downsize at some point, 88% wanted to stay in the same neighbourhood. Almost half of them said they would likely buy a condominium. Both statistics have big implications for the future of our cities. They show that the mix of housing seen in newer neighbourhoods will continue. Established areas might see increasing development to meet this demand.
The pandemic also has implications for younger buyers. Millennials have long struggled to get a toehold in the housing market. And it’s not getting any easier. While home prices have cooled, there are new rules governing home buying. Beginning July 1, getting mortgage insurance and borrowing money to buy a home will become more difficult.
These rules are designed to curb demand. But they do it by limiting the pool of eligible buyers. It all means millennials will find it harder to buy. Generation Squeeze reports that it takes a typical young person 13 years to save up a 20% down payment. It’s no wonder that a national survey conducted in February found that 46% of millennials said buying a home in the near future was “a pipe dream.”