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Home Values Will Survive Boomer Sell-off: Conference Board Of Canada Report Suggests

It’s a question that can create severe anxiety disorder among baby boomers: who will buy their single-family homes when they decide to downsize into smaller units? Pessimists believe baby boomers will soon flood the market with detached homes as health and financial issues force them to sell, creating an oversupply situation that forces prices down.

But a Conference Board of Canada report Monday said new young families and increased levels of international immigration should boost the demand for single-family homes in the future, at least partly offsetting any increase in the supply of baby boomers’ homes for sale.

Conference Board economist Julie Ades feels the relative supply of single-family homes will drop in the future – as construction levels decline and some detached homes are converted into semi-detached units.

“The market will gradually adjust on the demand side and the supply side,” she said. “That will help balance the market and we will likely see a mitigation of the negative impact on the price of single-detached dwellings.”

Baby boomers hoping to cash in on increased home values by selling and downsizing shouldn’t be too concerned about a possible surge in the number of aging people chasing the same strategy at the same time, according to Real Estate Board of Greater Vancouver president-elect Ray Harris.

“If a flood of homes did come on the market, I think the situation would correct itself very quickly,” he said. “Prices might drop, but people who don’t have to sell would take their homes off the market, so it becomes a self-controlling mechanism.”

Harris said health issues are the biggest reason owners decide to sell their single-family homes.

“Going from a home with two levels to a home with just one level is very common because of mobility issues (among older people),” he said. “Some owners just can’t maintain a big home because maybe their partner has passed on or had to move into a long-term care home.”

Abbotsford resident Marlene Nunn said health and financial issues were the biggest factors in the decision by her and her husband, Herb, to sell their Maple Ridge house this year and buy an Abbotsford condo.

They sold their 1,700-squarefoot rancher for $446,000 and bought a 1,200-square-foot condo for $261,000.

Herb Nunn developed a heart issue that made it hard to keep up with the maintenance work required on the house and cashing in the equity was “absolutely” another reason to make the move, Marlene Nunn said.

“It wasn’t an easy decision and it took a while for us to come to this conclusion, but it was just the right thing for us to do,” she said.

About 60 per cent of Canadians now live in single-family homes, but the Conference Board report notes the prevalence of people living in detached homes declines after the age of 55.

According to 2011 census data, 67 per cent of Canadians aged 50 to 54 lived in a detached house but the proportion dropped to 59 per cent for those between the ages of 75 and 79.

The report also said smaller multi-family units will account for a growing share of future residential demand in Canada because of affordability issues and demographic trends.

The proportion of one-person Canadian households rose from 25.7 per cent in 2001 to 27.6 per cent in 2011, due to factors such as a rising divorce rate, fewer marriages and common-law relationships and the aging population.