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Boomers should consider ‘for sale’ signs

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Interesting bit over at the Globe and Mail: Nearly a third of our population is boomers who will be nearing retirement soon. Should they be cashing in on the housing boom and sell early to fund retirement?

This could be one of the most important questions that baby boomers deal with as they enter retirement, and the financial impact will be widely felt. Expect a slowing in today’s hyperactive housing market, but not right away.

“There’s this idea that when the kids leave home, boomers will downsize,” said demographer David Foot, author of the influential book Boom, Bust & Echo and professor emeritus of economics at the University of Toronto. “Well, that doesn’t happen. You hold on to the family house, probably into your 70s because you want grandkids to come and visit.”

So figure on having about 10 years before a downsizing bulge alters the balance of sellers and buyers in our housing market. Should retiring baby boomers wait that long? Mr. Foot’s analysis certainly doesn’t suggest a bright future for house prices.

Read the full article here.

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FTA: "Out of a population of 34.6 million, Canada has roughly 10 million people who were born between 1946 and 1965. This massive boomer cohort started turning 65 this year."

Or not so massive. People die. The projected population pyramid for Canada less than 10 years out shows a ~0.1% peak over the rest at 55-59. Those people are still working.

http://www.nationmaster.com/country/ca-canada/Age…

All the senior owners I know lived in their homes until no longer able to care for themselves. The fantasy of mass migrations to apartments (or BC) have never found evidence in my experience.

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6 years 11 months ago
Keeping An Eye On
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David Foot’s analysis is so bare bones and incomplete, it should be quoted only by Realty Radio 98, and Global.

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6 years 11 months ago
Lilypad
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I woke up this morning again to the smell of sewer in the air at Garden City and Westminster Highway in Richmond. Boy, do I ever feel sorry for the poor saps who paid $500,000+ for a condo in this area.

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6 years 11 months ago
painted turtle
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@fixie guy

Retired people choose to stay in their large home if they can afford it, but the question here is: can they afford it? Garth Turner keeps talking about how broke the boomer generation is since they have not saved for old age, so their only big asset is their home. The way I understand the article, the writer also hints there could be a price decrease in the near future, so boomers should rush for the exit.

But I agree with you, 10 million people will not do the same thing at the same time 😉

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6 years 11 months ago
Dave
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@fixie guy:

I agree. I think the vast majority of boomers will stay in their homes until they have to leave for health reasons. Some boomers will downsize, but I doubt it will be any kind of mass migration. It will be a very slow and gradual trend over 20 years.

On the same topic, a recent survey said 15% of boomers in Canada intend to retire in Victoria.

http://www.carp.ca/2011/10/06/boomers-eye-retirem…

Intentions and actions are clearly very different things as the Buddha would say. No way in hell 1.5 million boomers move to Victoria in the next 20 years. However, if just 10% of the 15% followed through, it would be a major thing. All you David Foot demographic types should be buying condos in Victoria ahead of the boomer boom.

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6 years 11 months ago
bubba
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People that have bought, say, 30+ years ago have paid off the mortgage and have a lot more leverage in chasing the market. They can take a bigger haircut to extricate themselves.

The ones screwed are those underwater as the prices keep collapsing.

By the time one is approx 70+ years old, one is looking to downsize, the wear and tear of keeping a house catches up.

The absolute dead meat will be all those McMansions….lose value and end up as slums if HAM dries up.

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6 years 11 months ago
Jim
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Dave,

If that story is true, it is time to invest in long term care homes and funeral parlours in Victoria. I lived there for 5 years, and it is already full of doddering old fogies.

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6 years 11 months ago
jesse
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@Dave: "I think the vast majority of boomers will stay in their homes until they have to leave for health reasons."

I don't have any concrete data either way but I'm not convinced it's a "vast majority". I'd say at least 30% of people I know who have passed 55 have moved after their children left home. This didn't necessarily mean they bought smaller houses — some simply moved to similar dwellings in locations away from their former jobs — but they did vacate family-style homes in urban settings.

The Vancouver dynamic is different because a large portion of the populace is unlikely to retire outside the city. Instead they will attempt to monetize their property in various ways.

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6 years 11 months ago
Dave
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@Jim:

Speaking of which… have a look at Oak Bay. How many over 65's have downsized? How many remain in their homes. For the most part, people prefer to stay in their home than move.

I suggest investing in lawn care businesses.

I'm not holding my breath for the mass exodus of boomers from their homes.

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6 years 11 months ago
Anonymouse
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@bubba: "By the time one is approx 70+ years old, one is looking to downsize, the wear and tear of keeping a house catches up."

For some, the wear and tear of having to move is too much. Most people when they reach that age have arranged their life the way they like it – the place where they live, their friends, their neighbours, their furniture, the piles of junk in the attic. I wonder what proportion actually decide to downsize, and go through the hassle of vacating a house full of decades worth of possessions and memories? Does anybody know?

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6 years 11 months ago
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@Dave:

Seems that we're thinking along the same lines. I'd love to see some stats, but honestly I'd be surprised if over 20% downsized.

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6 years 11 months ago
Check-in
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"On the same topic, a recent survey said 15% of boomers in Canada intend to retire in Victoria." That is all nice and dandy what people say on a little newspaper survey, but Victoria proper is only anticipating about another 40k over the next twenty years. The OCP and city planners have done their due diligence. And of course, Victoria has already started its price collapse… Even Qualicum Beach and Parksville are seeing property prices crumbling fast because they built up to much inventory for these long awaited retirees – Qualicum Beach is a nightmare with their glut of homes. I work one week a month out of our Victoria office and I can tell you the myth of "all of Canada's retirees want to live here" has lost a lot of its shine. As an aside, my Victoria secretary… Read more »
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6 years 11 months ago
Anonymouse
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I met a senior once who lived on South Cambie. They paid a 4 figure sum for their bungalow when they bought it new, and could probably get close to 7 figures today. They just found it amusing, and never entertained the thought of selling. It's possible many are considering their houses to be their kids inheritance rather than their own retirement funds.

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6 years 11 months ago
Kitz college girlz
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downsize???? I don't tink so. In North America you only super size. It is ingrained in the psyche.

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6 years 11 months ago
Patiently Waiting
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Does anyone have stats on how often Vancouverites move? I remember a story that said every few years, as in more often than every five years IIRC. I don't have any reason to believe boomers won't continue moving every few years until their mobility restricts them.

I don't know any local boomers that live in the same place they did 20 years ago. None.

Also, many people here are from elsewhere in Canada, and might want to move back where its cheaper to live. A 65 year-old might also want to be near 85 year-old parents. I know of anecdotes of this happening, but it would be interesting if someone has stats.

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6 years 11 months ago
Oilman
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Nassim Taleb on the 'Occupy' movement. Also, he's very critical of US Investrment banks, banker compensation, and bailouts. Fantastic.

http://www.bloomberg.com/video/78027552/

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6 years 11 months ago
jesse
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@Check-in: "they are parasites that destroy the moral and economic fabric of neighbourhoods and communities"

Funny, HAM said the same thing about entitlement positions in government departments. Might as well paint the whole thing with one brush.

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6 years 11 months ago
victoria
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I don't know … I am thinking about my parents and friend's parents. These people are before baby boomers. My parents moved to a condo – my dad was sick of shoveling snow and my mom had arthrities. They also wanted to go to Arizona for a few months every year. Many wanted to travel and did not want to leave a house empty. Some parents sadly died at around 65 – usually cancer – after 50 it really starts hitting people and some remarried and moved into new digs or remained alone – in new digs. Many widows moved into my parents condo. Also many many divorced after the kids left home and sold the family house. Many many different scenarious. I also know of many reitrees that decided to move into the city from the burbs for walking… Read more »
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6 years 11 months ago
Beecher
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"Funny, HAM said the same thing about entitlement positions in government departments. Might as well paint the whole thing with one brush."

Agreed then – all of China is corrupt and parasitic not just the HAM that makes it to our shores.

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6 years 11 months ago
jesse
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@Patiently Waiting: This is one report from TD: http://housing-analysis.blogspot.com/2011/08/2011…

BC residents move more than others, and before they planned, though it's unclear as to why.

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6 years 11 months ago
Dave
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@Check-in:

I agree. I don't buy it either.

Victoria will do better than 40k in 20 years though IMO.

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6 years 11 months ago
Manna from heaven
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Yet another article regarding Generation f'ed in BC.

http://www.vancouversun.com/news/Incomes+house+pr…

Anyone got a solution?

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6 years 11 months ago
Kitz college girlz
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The bottom line?

"B.C. is now the hardest province in which to raise a family," study author Kershaw said in an interview. "And that's because we're the only jurisdiction in the country where household income for young couples has actually fallen behind where it was a generation ago."

Manna from heaven Says: Anyone got a solution?

Solution to debt serfdom is debt jubilee.

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6 years 11 months ago
victoria
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We are essentially not a "young family" – we had our children much later but even for us living in BC has basically bankrupted us.

I am so ready to leave.

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6 years 11 months ago
Laibach
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@Lilypad:

I woke up this morning again to the smell of sewer in the air at Garden City and Westminster Highway in Richmond. Boy, do I ever feel sorry for the poor saps who paid $500,000+ for a condo in this area.

That's part of the back home experience and you have to pay extra to have those special effects that mimic your homeland and evoke nice memories.

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6 years 11 months ago