# Demographic Shift Effect on Real Estate Prices.



## Islandguy (Oct 19, 2011)

Hi All, 
I wanted to start a discussion on the generational impact of housing prices. 
I’m looking at buying my second home here in Victoria, British Columbia. Many of the homes here are very old (1910-1950), with an average price between $450-$600 for a starter home. 

Two generational impacts I am thinking of:
1)Baby boomers begin to retire and start downsizing into smaller homes and condos. This will flood the market with more homes and reduce prices.
2)Baby boomers begin converting rental properties into cash to help fund their retirement. Many become worried as prices continue dropping, and sell for cheap, furthering the drop in price. 

These factors are making me hesitant to purchase a property in the near future. These concerns are not specific to Victoria, but may happen around Canada.

What are your thoughts on this?


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## JayRoc (Apr 4, 2009)

I've thought about this as well, but I think it's still a ways off (years). If you need a house now, you need it now. It would be a good idea to keep some cash on hand for good deals in the future, however.


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## crazyjackcsa (Aug 8, 2010)

I'd say that 100 years ago my house was built. It's about 2000 square feet with a walk up attic. It was a "good" size then, and is a good size now.

So in 100 years, nothing really changed. I forsee the same thing happening in the next 100. You're forgeting the nostalgia factor with home ownership, especially when there is no monetary need to sell, people will stay right to the end.


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## kcowan (Jul 1, 2010)

I would say that those two trends have been with us for ten years. Many people are upsizing in their retirement because they will be spending more time at home. People that hold investment properties are considering their liquidation as a source of funds if they need extended care when they get older. But their free cash flow can also fund such requirements.

So, like you, I thought these trends would impact real estate negatively but so far they have not.


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## sags (May 15, 2010)

I have been following the local MLS regularly for about 5 years, and have noticed that 50s style bungalows and small ranches are coming up for sale in more abundance these days.

They used to be listed for over 200,000 and can now be purchased for 170,000 or less.

In addition, around here there have been a plethora of so called......luxury apartments built for rent. They seem to cater to older folks who don't want ordinary apartments, but prefer grand lobbies, indoor pools and gyms, and crown mouldings and hardwood floors etc.

The rents range from about 1400 - 2000 a month, and they are pretty well fully rented.

So.........I would say the types of homes that older folks would have purchased and held onto until retirement, are being sold off and the people are moving into luxury apartments.

I also notice the new...larger, more expensive homes are just sitting on the MLS listings, and some of the contractors have listed them for rental.

Given the lack of jobs for young people, who most desire the big homes with all the trappings, I think the market for them is drying up rapidly.

An interesting statistic is that 70% of college/university graduates are moving back home. It is unlikely they will be jumping into an expensive new home anytime soon.

In some urban areas.......GTA or Vancouver......it may not be so noticeable, but in a lot of areas home prices are already in decline.

Homes are available in Ontario or Saskatchewan for less than $60,000, but they are located in small towns, villages, or in cities that are in decline due to a lack of employment (Southern Ontario for example)

Retirees are and will continue to flock to the cities. In our little complex of rental townhomes the residents are older, mostly retired, and have come from different outlying and rural areas. They have time on their hands and want access to first rate libraries, parks, shopping, theatres, clubs, and most certainly health care facilities. In additon, their kids are happy to have them in the city and with neighbours who can keep an eye on them. That is what happens in this complex, as many of the tenants have been here for years and years. If someone doesn't open their front door during the day.........someone is inquiring if they are alright. 

I think this trend will quietly continue, but don't expect to see a sudden drop in real estate prices..........just a slow, steady decline.


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## Guigz (Oct 28, 2010)

sags said:


> An interesting statistic is that 70% of college/university graduates are moving back home. It is unlikely they will be jumping into an expensive new home anytime soon.


I have seen this statistic a few times. May I ask what the source is?

Don't forget that baby boomers span a period of 25-30 years and they plan to never retire because they have no $. I would expect that we may see some influence on the overall market but would not expect to see major changes.

I expect that most retirees would not sell their home if they think that the price they would get is too low (i.e., they are not forced to sell so the downwards pressure is limited).


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## sags (May 15, 2010)

A new poll conducted by Twentysomething.com reports that 85% of grads are returning to live at home.

This university website puts the number at between 60-85%.

http://www1.umn.edu/parent/news-events/articles/spring-2011/boomerang-kids/index.html

I don't think current home prices mean a lot to many baby boomers, who purchased their homes in the 1970s. Even with declines in home prices, their home is worth far more than they paid for it. Many of the boomers don't live in "boom and bust" real estate areas, and haven't experienced the same increases and declines in home prices.

If they happened to own some farmland, they have hit the lottery.

We bought and sold 6 homes over a 30 year span, and never experienced either a big rise in prices or fall in prices. Mostly........they just stayed the same.

Many boomers will stay in the home where they raised their families for as long as they can........but eventually the day comes when they can no longer maintain the home or need health services.

It is a natural transition that I see evidence of all the time. People sell their homes and move into a rental unit or an upscale retirement home. Eventually, they can't manage on their own and move into a nursing home. That is the way of life.......and a reason why vacancies at nursing homes are getting difficult to find. My wife works p/t for a company that has an upscale retirement home and a nursing home at the same location. The upscale retirement home always has a few vacancies, while the nursing home is always full. In our area, people don't get to choose the nursing home they want. They have to go on a waiting list and be placed. Every accomodation is made to allow them to stay close to family and friends, but they may have to go somewhere first and transfer when an opening comes up in the home of their choice.

Given the large number of baby boomers vs the small number of future qualified buyers, there is going to be a surplus of homes for sale at some point in the near future.


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## Berubeland (Sep 6, 2009)

Until the boomers retire there will be no jobs for these grads. Meaningful jobs with decent incomes not jobs at Timmy's and McDonalds. 

I foresee a move to retirement communities like Eliot Lake and even my home town Temagami where the only people who move there are retirees who have sold their expensive urban house and moved there. 

I see a giant increase in things like personal care services for these boomers who are delaying a nursing home or retirement residence. Honestly just because you're old doesn't mean you are addled. The stench of pee filled depends in those places is revolting. I wouldn't trust myself to the tender care of the minimum wage worker. I also foresee a huge increase in the number of abuse/neglect cases in these places as the become more stressed and over capacity. 

That's my prediction...


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## Mall Guy (Sep 14, 2011)

Well, if you are in Toronto, Vancouver or Montreal, the concern would be reduced somewhat as these cities benefit the most from immigration (80%), and going forward immigration will become the main source of population growth in Canada. 

However, there are now more Canadians 65 years and older than there are 15 years and younger, 2011 was the first time this has happened in Canada. Agree with 'sags', aging Boomers will migrate out of the burbs into the cities (for all the reasons mentioned). Best bet, buy on the subway line in Toronto (or similar transit hub in whatever city).


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## kcowan (Jul 1, 2010)

Mall Guy said:


> Best bet, buy on the subway line in Toronto (or similar transit hub in whatever city).


Except that the premium will already be in the price. The only way is to guess where the next line is likely to go and be right! Or buy and fixer upper and DIY.


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## tara88 (Dec 3, 2011)

I don't see housing prices ever dropping in the Victoria area.
It's climate is the warmest in Canada and many boomers will want to come here to retire. It's very attractive area to live in. There's only so much growth that can be allowed due to the geography. Housing prices have never dropped substantially here. They always rebound.


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