Seniors are making it more difficult for younger people to buy homes in Ontario and especially Toronto, CMHC report shows.
A growing trend among Greater Toronto Area seniors to stay in their homes longer instead of downsizing has generated greater uncertainty for Canadian Millennials hoping to realize their dream of home ownership, a new report shows.
The Canadian Mortgage and Housing Corporation (CMHC) studied 10 years of housing data among Toronto seniors, evaluating how many decided to stay put in the real estate market.
According to the report, seniors aged 65 and above were more likely to own homes in 2016 than in 2006, stating that they made up 25% of Toronto homeowners as compared to 20.4% a decade earlier. Meanwhile, their home ownership rate grew from 73.4% to 75.1% within the same decade.
Those were among notable findings that saw Inna Breidburg, a principal economic analyst with the CMCH concluding that if the same trend persists, younger generations may be locked out in the near future.
Inna Breidburg writes that the shift contradicts past trends. Usually, seniors start selling their homes once they reach retirement age. Some opt to downsize in comfort as others sell their homes in order to finance their retirement years.
Aging Canadians are opting to stay in their homes for longer periods of time for various reasons.
Seniors Working Longer
The report notes that more and more seniors are now opting to continue working, leading to higher incomes. Moreover, the net worth of seniors in the Toronto area continues to increase, and Breidburg cites government support, retirement savings, and employment incomes as major contributing factors.
With improved overall health and better personal finances, an increasing number of seniors are now able to stay in their homes. The tendency of seniors to cling to homes impacts directly on the low-rise market.
Around 57.5% of seniors owned a single detached house compared to 26.2% who owned a condo or duplex.
Although the number of seniors owning single detached homes had dropped by 2% between 2006 and 2016, the number of older residents staying in single-detached rentals was increasing.
Housing crisis looms large
With the senior population growing at a rapid rate, an even worse housing crisis looms in the near future.
Experts argue that young people are mainly vulnerable in a poorly functioning housing system owing to their lack of opportunities and resources. Competition for the limited supply of homes for young people might worsen over the next decade as more and more seniors remain in their homes for longer. Moreover, the number of seniors opting to rent ground-oriented dwellings might increase further in the future thereby adding up to the challenges prospective first-time home buyers face in the real state sector.