Baby Boomers are shaping Canadian Real Estate: CMHC

There is no question that housing plays an important role in the Canadian economy, but a new report entitled “The Observer” from CMHC suggests that it is a driving force in the economic health of the country.

The CMHC says, “Housing-related spending accounts for more than 20 per cent of Canada’s Gross Domestic Product, contributing about $330 billion to the Canadian economy in 2010 — up 7.1 per cent from $308 billion in 2009.”

“The Observer is unique in its in-depth review of housing conditions and trends, including developments — both domestic and international — that influence housing finance and housing market developments in Canada,” said Karen Kinsley, President of CMHC. “The Observer’s data provides insight into Canadian residential mortgage practices and housing market trends, while highlighting the importance of housing in this country.”

The report examined several interesting trends that have begun to take root and alter the housing market in this country, among them the rise in popularity for condo living, a return for buyers to urban centres and the emerging importance of the Baby Boomer as a real estate buyer.
The report predicts that seniors will comprise nearly 24% of the population by 2036, which is a significant rise from current levels. What is interesting in this regard is that seniors have specific housing requirements, and that the sheer number of Baby Boomers stands to reshape the housing industry as we know it.

“As people age, their needs are likely to change due to disabilities, medical conditions, changes in their household composition, and/or changes in their financial situation.
Population aging therefore requires various forms of housing, a range of models of coordinating housing with support services, and community planning that respond to the needs of seniors and enhance their quality of life. ”

The report also touches on the impact of the continued low interest rates in the country, and the tremendous influence they had on raising housing prices nationally.

There has also been a definite shift, leaning towards the construction of condominiums, as land becomes scarce in some urban centres and as housing tastes begin to drift towards `simplified living` associated with condo living. The report says, “ Over half of all housing starts in Vancouver, 48% in Montréal and 45% in Toronto were intended for condominium tenure. “

There has been some concern about the spike in condo construction, suggesting that the surge in construction portends areas to become vulnerable to market correction, due to an oversupply, but many in the business feel that there is enough demand to meet the increase in supply.