An interesting report came out this week from Royal Lepage about Baby Boomers. The headline reads “Most Baby Boomers have no intention of downsizing.
“The poll by Leger Marketing found that of the 40.6 per cent of Baby Boomers (born between 1947 and 1966), who do have plans to move to another primary residence, almost half (43.5 per cent) are looking to purchase another primary residence that is a similar size or larger than their current property.
I was a little confused at first, since “most” equals more than half, not almost half. But, if you consider that nearly 60% are not planning on moving anywhere, and a good portion of those that are, will go bigger not smaller, then the vast majority are not planning on downsizing. This is certainly contrary to what many demographers have been telling us – that the boomers will start moving into condos and old folks homes, leaving a glut of single family homes on the market.
If the boomers live out the end of their lives in their big, single family homes, and builders keep building new single family homes for younger families, could the market be even more oversupplied with these homes? Or will the free-loading kids currently living rent free with their boomer parents never move out, and just inherit the mansions? Currently, 33% of gen Y prairie dwellers live with family for free.
“The adult children of Baby Boomers aren’t going anywhere fast. Good jobs have proven more difficult for them to find, they’re extending their studies and they’re living at home. It is no wonder the concept of swapping a family-sized home for a small retreat has lost its luster,” said Phil Soper, CEO of Royal LePage Real Estate.
Also surprising, nearly 70% of the members of gen Y (born between 1980-1994) considering buying a home, want a single family residence, not a condo. Nearly 60% of these kids want to buy in the ‘burbs. They say this is because they want to start families, and stay close to family and friends. This is vastly different from the trend reports we’ve been hearing about wanting to be closer to downtown. In fact, the survey showed that proximity to downtown, restaurants or entertainment was the least important factor for gen Y’ers when choosing where to buy.
“The young people who make up Generation Y are our first-time home buyers. Like their parents, they dream of owning a lovely house in the suburbs, which provides value as well as access to parkland for children to play and the perception of greater family safety,” said Soper. “Even as condominium living becomes more popular across Canada, the study results do not point to a corresponding decrease in demand for traditional single-family homes. For the Baby Boomers that do head downtown, there is a generation waiting to move in [to their single family homes].”
I have to say, this survey matches the experiences we are having with our clients more than what demographers have been telling us. Perhaps this survey is more of a snapshot of “now” and the demographers are telling us about the future. But almost all of the young couples and especially families we are working with now, want single family homes. These clients are choosing the suburbs for the most part, because they can get the home they want (a decent size that doesn’t require renovations) for a price they can afford.
About Sara MacLennan
Sara MacLennan is the Director of Marketing at Liv Real Estate and a licensed Real Estate Associate. The bulk of Sara’s experience and wealth of expertise lies in on-line technology and marketing both for agents and consumers. Sara is the former National Director for Interactive Marketing for Coldwell Banker Canada where she was responsible for an extensive training program traveling to offices across the country training agents and brokers on marketing and technology. Find Sara on Twitter @edmontonblogger.
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The boomers are not dumb. If they downsize and buy smaller/cheap ones, what will they do with the extra cash? GIC at 1%?
Best thing to do is buy as huge and expensive a house as you can possibly afford. Then get a HELOC and invest the money. You should be able to get more than 1%, plus write off the interest.
People aren’t dumb. That’s why large houses are still attractive.
We’re not all smart. I know one who put over a hundred gran into Canadian Oilsands, Encana, Baytex, Enerplus, PennWest & Niko two years ago. He’s not much fun to be around these days.
The only way they are getting 1% is if they are dumb or ill informed. My retired moms balanced low risk portfolio this year is up almoat 8% dividends in. See bank earnings today? Might have to book a sunny holiday for the family! Bring the dividends!
As for the survey, who knows what they will do. Intentions and reality often do not jive in the end. Most of my friends have already given up on new year intentions!
I know lots of you will disagree but I hate hate hate the suburbs. Grew up there (in a different era) and we all hated it. Love the country, love the city, hate what is in between.
Listen to the song “subdivisons”.
Let’s see, your mom would get 8% “low risk” return for stock dividends (most Canadian banks pay 4% and even they have moderate risks) and yet your friend is paying 6.5% for mortgage rate. The kind of evidence you use in your argument doesn’t show much rationality.
Sprawling on the fringes of the city
In geometric order
An insulated border
In between the bright lights
And the far unlit unknown
Growing up it all seems so one-sided
Opinions all provided
The future pre-decided
Detached and subdivided
In the mass production zone
Nowhere is the dreamer or the misfit so alone
Whether suburb is good or bad really depends on which city your are talking about. That particular song was referring to Toronto, where there is a real vibrant downtown, the country side has many trees.
But here close to Edmonton, the country side is too bare and the downtown is too pathetic. Suburb is where real lifestyle is at.
Well, all the drug addicts, alcoholics, pimps, whores and other assorted riff-raff make for a very exciting downtown area in Edmonton.
As for the countryside… the evening sun shimmering off the wings of the mosquitoes is beautiful in summer. And in the winter the bitter cold and wind is a welcome relief from the stifling heat of summer. And don’t forget those potholes in spring! It’s like being on the moon without all the cost of getting there!
Just to add that the pothole advantage is also shared with downtown.
Mom has money (not a ton, but enough), friend needed money to buy ill fated real estate. Bank prefeereds are part of the portfolio but so are etf’s and others. Some of her major etf holdings are up over 12 percent. I guess we just have a good investment guy.
As for the Rush tune, it is about Toronto specifically but I believe it applies to all suburbs in a general way. I still get the creeps cruising a close, circle, or lane that all start with the same letter. Soul sapping drone creating sprawl…ach!
I do agree though that downtown Edmonton is a sess pool though. Maybe the U-Strath-124 street-FSJ are better examples for Edmonton.
I am often confused by the way you throw in “evidence”. Can you please just clarify one thing:
When we discuss about real estate vs other options, do we consider the situation from an average person. Or a stupid person? Or a very smart person?
Interesting article. I’d like to know where this poll was taken, and whether the results would vary based on location.
I sell real estate in the Comox Valley, an area where Alberta makes up about 40% of our out of town buyers. Typically from either Calgary or Edmonton. 99% of these buyers are within the baby boomer classification.
Since these buyers can get more for their money in the Comox Valley area, they don’t seem too overly concerned about the size of the house, but there are a few unique items that they do seem to consistently look for:
1) One level living
2) Low maintenance
3) Close to amenities
One level living typically means smaller homes but new styles of homes are emerging that offer one level living but with a larger square footages. Homes that have spare bedrooms upstairs while keeping everything else on the main level for example.
Low maintenance normally means small yards, and newer construction.
Locally, one level homes are going up in price significantly faster than traditional two levels, and builders are doing there best to keep up.