There were two articles in the Globe and Mail newspaper recently discussing the Baby Boom Generation. One was an article by Rob Carrick. Rob discusses the size of the Baby Boom Generation (born in the years 1946 and 1965), plus their affect on the housing market. The other article was written by Chris Atchison. Chris writes about retirement homes and the upcoming demand for rooms and styles of retirement homes.
Rob Carrick makes the argument that now might be a good time for Baby Boomers to sell their home and realize the gain in house price. Home prices are at all time highs. By not selling now, boomers might be risking the high value in their home. The housing market is very cyclical. Prices go up and down. Selling now makes perfect sense. But will boomers actually sell?
My parents, and my peer’s parents are all reaching, or have reached, the age of 65. These people would be described as early baby boomers. They were born in the 1940s and they have reached their retirement age. None have sold their home yet. Also, most people that I know in their 70s and early 80s, still live in the home in which they raised their children. Is it in our culture to stay in our family residence long after we retire?
Selling a family home is a big decision for a few reasons. The first is the emotional attachment to the property. In addition to the emotional attachment, many family gatherings still take place in the family home as children and grandchildren come for Holiday dinners. Selling and moving into a two bedroom condo, or a smaller home reduces the convenience of these family gatherings. Location is another factor that causes boomers to stay in their home. Home originally purchased in the distant suburbs in the 1970, are now located in popular urban areas: as development has expanded, this homes are now in great locations.
As we have mentioned before on this blog, more and more Canadians are carrying debt into retirement. The Canadian debt to disposable income level is now at 150%. These number indicate that retired Canadians might be forced to sell their home. So as much as it’s not in our culture to sell the family homestead, it might become necessary to sell if retired Canadians want to be able to afford their retirement.
If Canadian’s do end up selling the family home in order to pay for retirement, where do you think that they will want to live? The article in the Globe says that new retirement homes are catering to early baby boomers. There new retirement homes will have all the amenities that boomers are accustom to having: pools, exercise, entertainment…
It will be interesting to see what happens over the next 10 years in the Canadian Real Estate Market. Will boomers sell or stay? Will people take on more debt to stay in their family home, or sell their homes and retire?
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