One of the largest and most important factors when looking at the broad Real Estate market is the demographics within that market.
The largest and most noteworthy demographic generation of modern times, is commonly referred to as the “Baby Boomer” generation. The Baby Boomer generation refers to people born during the demographic post–World War II baby boom approximately between the years of 1946 and 1964, giving an age range between 51 and 70 as of 2016. As a group, they were the wealthiest, most active, and most physically fit generation up to that time, and amongst the first to grow up genuinely expecting the world to improve with time.
The sheer size and wealth of this cohort has had a large impact on the real estate market over their lifetimes. They own and control a significant portion of the real estate in our markets today. As they continue to age and hit traditional retirement age, their future plans for this real estate and their future real estate needs will undeniable influence our markets.
A few of the impacts we have seen from this aging baby boomer trend and expect to see in the future include:
- As their children move out and they become “empty nesters”, they will seek to downsize their personal residences. This should lead to higher resale supply at some point, although the timing of this is uncertain as boomers have been staying in their homes longer than expected. This supply might come as a godsend considering the low supply the current market has seen of late. Also note that not only are they looking to downsize physically, but also importantly to downsize financially, as a large part of their net worth’s are tied up in the equity in their homes.
- The boomers who have downsized are seeking to not have to deal with stairs as they age, so one floor homes are attractive. This translates into larger demand for ranch/bungalow style homes. Also townhouses or semi-detached homes or condos are popular choices.
- These boomers are more active and have higher retirement incomes than previous retirees and as such require more amenities or available activities. Trails, parks, golf, tennis, etc are important in these neighborhoods catering to aging boomers.
- The demand for healthcare will increase as the proportion of the senior population increases and life expectancy continues to increase. This healthcare needs to be high quality and conveniently located and the new medical development we’ve been seeing in various markets has reflected this.
- As this age cohort continues to age in the future, nursing homes or assisted care facilities demand will greatly increase. Also considering the retirement income of this group, the quality of these facilities will need to reflect the choice that this group will demand.
- Vacation and winter properties will be in demand from these retiring boomers as they have the means to afford such recreational properties. Lake communities and snowbird locations have already seen the start of this wave of demand.
- Lower cost communities stand to benefit from migration from higher cost urban communities. As stated before, boomers have a large amount of home equity that needs to be unlocked for retirement incomes and a move that frees up that equity will look attractive. In our home market of Windsor ON, with some of Canada’s lowest housing prices, we’ve seen a huge pickup in demand from retirees from the GTA and other higher cost markets.
The aging of the baby boomers is a huge upcoming development in the real estate market and one that has just started to play itself out. How it does play out will have far reaching ramifications for all of us.
Have you noticed these demographic impacts starting to play out in your market?
Office: (519) 966-0444
Cell: (519) 995-5620