Is The Market Going Boom?

The Baby Boomers are going to up and sell in the millions and move into downtown condos.

The Baby Boomers are determined to age in place.

They had it easy, with cushy jobs with great benefits that let them sit around and eat bon bons all day and leave a rotten economy for their poor, underprivileged children.

They worked harder than any generation before or since, and are unappreciated by their spoiled, entitled brats.

Whatever your view of the role of Baby Boomers in the future housing economy, there’s a view to match it in the media. Only one thing is a sure bet — Baby Boomers will have an impact. But how extreme will it be?

U of T economics professor David Foot coined the phrase Boom, Bust & Echo to describe the Canadian population, a bunch of postwar babies born from the mid-‘40s to the mid-‘60s, a smaller boom born from the late ‘60s to late ‘70s, and an echo of Gen Y-ers born after 1978. Demographics, he said, are the dominant determinant of an economy.

Earlier this year, Foot told the Economic Developers Council of Ontario in London that an aging population tends to slow economies all over the world, with reduced demand for goods, fewer young workers, and a smaller tax base. Common sense would tell us the same thing.

But what does it mean for the housing market? Generally speaking, the farther you get from big cities, the older the population, and yet some pundits are claiming the Toronto condo market is about to be taken over by aging Boomers.

CBC reported recently that in the next few years, Boomers will start to feel isolated in their big suburban homes and embark on a pilgrimage city-ward, eager to snap up what others are saying will be a glut of small condos. (As usual, for every story there is an equal and opposite story. There either will be a surplus of such units, or there won’t, depending who you ask.) They cite a Conference Board of Canada report that says demand for urban condos and townhomes will increase as the population ages, as well as benefit from increasing numbers of singletons buying properties.

Any time a powerful demographic does something in great numbers, it has both an upside and a downside, and in this case, the downside would come if the predicted popularity of smaller units comes at the expense of future demand for larger, single detached homes, according to Conference Board economist Julie Ades. She said figures show about 60 per cent of Canadians today live in single detached homes, with about a third of the population comprised of Boomers. While 67 per cent of those aged 50 to 54 occupied single-detached homes in 2011, it dropped to 59% for those aged 75 to 79.

While it may increase the demand for smaller units, TD chief economist Benjamin Tal said that units going up today may be too small. With that in mind, some builders are designing their floorplans to let future owners buy two units and easily combine them. On the flip side, Ades notes that some of the 4,000-square-foot suburban singles might in the future become semis.

A Royal LePage report a few months back said that while Boomers are thinking about moving, and some of them into smaller homes, most want to stay in houses, with less than a quarter thinking of condos or apartments. That same report said the Gen-Yers who are snapping up urban condos are going to be looking to light out to the burbs in the next few years, leaving our glass and steel towers vertical ghost towns.

A Scotiabank Economics report around the same time said population aging would not fuel a demographically induced sell-off of Canadian homes, with today’s Boomers generally a healthy, wealthy, long-lived lot who like their garages and their yards. It said that over a five-year period, only a fifth of homeowners over 65 tended to move, which is about half the rate of the rest of the population.

While comments varied on all of the articles I read through while musing about Boomers— with a surprising amount of vitriol aimed at Boomers for ruining everything, levelled by some bitter Gen-Yers — many included a variation on this succinct example: “What a dumb article.”

Truth is, Boomers are human beings, and they make individual decisions. There may be trends, but they’re not going to do anything en masse. Like the 20-something echo Boomers contemplating flight to the suburbs, some Boomers are contemplating downsizing into urban condos, and some aren’t.

If, as a Scotiabank economist noted in the wake of their research, the downturn of the housing market is already “well underway,” then we’re still in pretty darn good shape. Builders will, for better or worse, continue to chase the market trends, and I suspect the bloom will be off the rose for some of those magnificent glass towers before long, but my hope is that all this uncertainty fuels the building of human-scale, mixed-use, master-planned communities that are comprised exclusively of neither 4,000-square-foot mini-mansions, nor of 40-storey towers of steel, but a healthy mixture of both, with a bunch of semi-detached and townhomes, some boutique mid-rise buildings, lots of commercial space, some office space — a little bit of everything, all together.

It’s not Boomers or echo Boomers or any one group that’s going to scuttle the economy, if such a thing is coming. It’s the idea that homogeneousness works. Instead of putting the old folks here and the young folks there, those with kids in that neighbourhood and those without in this one, let’s integrate. Now there’s a radical notion.

Maybe we can even learn to respect both the generation before ours and the one after.  Extremism, whether in politics, religion, or the housing market, is never a good a thing.