Boomers leaving empty nests and first-time homebuyers fuel increases
Sun
Growing demand from boomers over age 55 leaving their “empty nests” for smaller homes, combined with first-time buyers looking for affordable housing alternatives, will keep the price of condos in the Vancouver and Victoria regions going up over the next several years, a new report shows.
“The growing number of residents who are 55 and over will provide a solid demographic underpinning to the health of condo markets in British Columbia‘s two largest cities,” Genworth Financial Canada said Wednesday in a release accompanying its report, Summer 2007 Metropolitan Condominium Outlook.
The outlook forecasts condominium prices in Vancouver and Victoria regions will post average annual increases of about 3.8 per cent and 3.5 per cent, respectively, from 2008 to 2011.
Metro Vancouver‘s average resale condo price is forecast to rise from $314,471 in 2007 to $365,491 by 2011. In the Victoria area, resale condo prices are expected to climb from $264,471 in 2007 to $302,603 in 2011.
At 30 per cent, Victoria has the highest proportion of boomers per capita of the eight cities covered in the report, while boomers make up nearly one quarter of Vancouver‘s population.
“These cities historically have attracted individuals over age 55. With their favourable climates and natural beauty, both are desirable places to retire,” Peter Vukanovich, president of Genworth Financial Canada, said in the release.
“In the past decade alone, Victoria‘s over-55 population has risen nearly 22 per cent, while Vancouver had a dramatic 37-per-cent increase. This target demographic for condominium apartments will help maintain demand in the region and ensure steady price growth.”
“Condos have traditionally been the entry point for first-time homebuyers and we continue to see that in major urban centres,” said Bob Finnigan, president of the Building Industry and Land Development Association.
“But we’re also seeing a clear trend among downsizing baby boomers who are looking for convenience, security and the ability to enjoy their retirement living in a condo where they can walk to restaurants and shopping, transit, and enjoy a new lifestyle.”
But boomers and first-time buyers may not be competing directly for exactly the same condos, according to Cameron Muir, chief economist for the B.C. Real Estate Association.
“I think when we look at the market for the adult lifestyler, it will likely be more on the luxury side,” Muir said in an interview Wednesday. “We have yet to see any significant evidence of retirees or boomers that are going to retire having an impact on the low end of the condominium market.
“That’s not to say it won’t happen, but we haven’t seen any evidence of that yet.”
And as Genworth’s Vukanovich points out, first-time buyers could even take some comfort in a condo market bolstered by the boomers.
“The record number of baby boomers will help maintain demand for condos in markets across the country, keeping price growth steady. That will benefit first-time homebuyers, who otherwise might worry about their investment in a future condo downturn,” Vukanovich said.
© The Vancouver Sun 2007
