Wednesday, January 25, 2012

Aging Boomers, Immigration To Boost Demand For Housing In Canada

by Jim Adair



Canada's rate of homeownership is expected to increase and the future for condominiums looks bright according to an updated analysis of future Canadian housing demand.
By 2036, there will be more one-person households in Canada than any other category, due to the aging of the baby boomer generation. But the country is counting on immigration to be the main driver of household growth in the next 20 years, says a recent report from Canada Mortgage and Housing Corp. (CMHC).
The report is part of this year's 184-page Canadian Housing Observer, an annual report on the state of Canada's housing by the federal government's housing agency.
The report says the growth of housing stock in Canada is driven by household formation, which is linked to changes in the size and composition of the population. It grew faster in 2008, 2009 and 2010 than at any other time since the early 1990s. In 2010, 271,000 immigrants landed here – the highest total in 40 years.
International migration now accounts for about two-thirds of the population growth in Canada, compared to about 40 per cent in the early 1990s.
"During the 1990s, natural increase (the difference between births and deaths) shrank considerably as baby boomers aged," says CMHC. "Although births rose from 2001 to 2010, the number of births per woman (1.66 in 2007) is still well below replacement level (2.1)."
Most immigrants to Canada settle in Toronto, Montreal or Vancouver, which is why population growth differs across the country. But the report says immigration is increasing in smaller Canadian urban centres. From 2008 to 2010, Saskatoon had the fastest rate of population growth in the country, followed by Vancouver, Calgary, Regina and Edmonton.
Recent immigrants (in Canada less than five years) are about half as likely as non-immigrants to own a home, but as time goes on and their incomes improve, they are more likely to become homeowners.
"Immigrants' propensities to rent or own housing differ by place of origin," says the report. For example, 42 per cent of recent immigrants from Eastern Asia, the region that includes the People's Republic of China and Japan, owned their homes in 2006, compared to 11 per cent of recent immigrant households from Northern Africa.
"With immigration now the principal driver of population growth in Canada, immigrants are bound to be an important influence on housing demand, especially in cities that attract a disproportionately large share of new immigrants," says CMHC.
In Canada, the number of seniors (age 65 and older) will more than double by 2036, growing eight times faster than the number of people under 65. Seniors currently represent about 14 per cent of the population, but that share will be almost 24 per cent by 2036.
The city with the highest proportion of seniors in 2010 was Peterborough, Ont., where 19.4 per cent of the population was over 65. The lowest percentage was Calgary at 9.5 per cent. A recent bank survey asked which city in Canada people would most like to retire in, and the winner was Victoria. It currently ranks fourth for highest proportion of seniors, after Peterborough, Trois-Rivieres, Que. and Kelowna, B.C.
The leading edge of boomers started turning 65 in 2011, but the largest number of boomers won't reach 65 until 2024, and the youngest will turn 65 in 2030. The impact of the boomers will be felt on the housing market for many years, the report says.
"Aging households will support continued growth in condominium markets," it says. "Seniors have higher rates of condominium ownership than any other age group, and those rates have been rising. We can also expect to see growing demand for home adaptations and support services aimed at allowing aging residents to remain living comfortably in their homes."
Seniors are less likely to move than younger people. About 20 per cent of seniors moved between 2001 and 2006, compared to 44 per cent of non-senior households.
"The relatively low mobility rates of seniors are evidence of a preference on the part of many for staying in their current homes for as long as possible. Though behaviour could change in the future, mobility rates have historically been very stable," says the report.
The average age of the head of the household is rising – those aged 55 and older will make up half of all households by 2036. With the aging boomers will come a rise in one-person households, particularly women. MHC says one-person households will become the biggest single category of households by about 2021.
Alberta and B.C. are expected to see the fastest pace of household growth, while Newfoundland and Labrador will see the lowest.
Published: January 17, 2012