RBC expects Boomers to sell off their homes

The following is from an RBC Wealth Management Research-Insights report on Navigating-The-2020s-How-Canada-Can-Thrive-In-A-Decade-Of-Change

A national challenge: Finding homes for ageing Canadians.

In 2020, 45 percent of Baby Boomers will be 65 and over, with the others joining their ranks over the decade. By age 80, one in ten will be living in a seniors’ residence or nursing home, a number that will jump to one in four by the time they’re 85.

There will be about 650,000 people living in Canadian seniors’ residences or nursing homes in 2030, up from 450,000 now. Public and private resources needed to build the extra capacity will cost at least $140 billion.

The opportunity: One of the defining characteristics of the last decade was worsening housing affordability, both for homeowners and renters. This is likely to persist in the 2020s, especially in Canada’s largest cities, as strong immigration levels drive demand for housing. The steep cost of housing will make more of us renters—up to one million more, by our count. It will also fuel the growth of smaller housing markets beyond the more expensive cities, where younger Canadians have a better shot at buying their first home. The overall homeownership rate in the country is likely to fall from almost 68 percent in 2016 to 64 percent by 2030.

Building for the future

Canada’s aging population will offer an opportunity to address some of the country’s housing challenges. Over the coming decade, we expect Baby Boomers to ‘release’ half a million homes they currently own—the result of the natural shrinking of their ranks, and their shift to rental forms of housing, such as seniors’ homes, for health or lifestyle reasons. 

Downsizing boomers will put even more units on the market.

The homes Baby Boomers put up for sale—often units well suited for families bought decades earlier near urban cores—will be a long-awaited supply for new generations of buyers. If the price of these properties will be hard for first-time homebuyers to swallow (Baby Boomers won’t sell cheap), the turnover will bring opportunities for others to add to, and transform the housing supply. For example, multiple units could be built on a lot previously occupied by one dwelling. Just the kind of gentle increase in density that many see as a key part of the housing affordability solution in 

Canada’s largest cities.

To maximize this transition, though, more progress will be needed to modernize zoning bylaws and other restrictive housing supply policies—complex and emotionally charged issues to say the least. More than anything, this modernization will be critical in the decade ahead for new generations of Canadians to realize the same housing dreams as their Baby Boomer elders did decades ago.